India’s scrap trading activity has seen a near panic situation over the past few days with large consignments getting stuck at ports during the national lockdown, entailing huge losses for importers on account of demurrage charges. As a result, fresh import bookings have come to a near standstill, while there have been cancellations of bookings for April deliveries, SteelOrbis has learned on Wednesday, April 1.
Several traders said that large volumes delivered during March are stuck at major ports like Nhava Seva and Kandla in the west and that port unloading and transportation has come to a halt. According to estimates provided by the Metal Recycling Association of India (MRAI), about one million mt of scrap is lying stranded at ports with importers unable to clear the volumes, but having to incur port demurrage charges. “We have sought a waiver of port demurrage charges from the government, but there has not been any response yet,” an official at the MRAI said.
It has been pointed out that, apart from port demurrage charges, for each day of delay in releasing containers, shipping lines have been charging $50 for held-up containers, which, along with port storage rental charges, are causing imports to become completely unviable at present.
It is estimated by trade circles that a 15-day delay in clearing one 20 foot container from ports results in additional costs of around 15 percent of the total landed price of scrap, which is too high for any importer to sustain.
“Imported scrap prices have become completely irrelevant and inaccurate. No importer is able to make a costing of imports as there are too many variables by the time consignments land at port,” a scrap importer and secondary steel mill owner in western India said.
“Demand has completely vanished. Only very few secondary steel mills can find it viable to continue operating under the current circumstances. There is no offtake of even local scrap,” he added.
Market sources said that no import price is available for ex-US scrap and that all shipping lines originating from the region have stopped calling on Indian ports. The sources said that at least two contracts for April delivery concluded last month were cancelled by importers citing force majeure, while another contract has been delayed for delivery until the end of May.
According to sources, one western India-based secondary steel mill negotiated for ex-UAE shredded scrap on March 27 at $247/mt CFR Nhava Seva, compared to a level of $270/mt CFR in earlier week, but subsequently on March 30 the importer canceled the contract, unwilling to risk tonnage being stranded at port and higher port charges.
The SteelOrbis reference price for imported shredded scrap in India has fallen to $245-250/mt CFR, compared to $270-280/mt CFR reported on March 26.
“The first phase of the lockdown is scheduled until April 14. Even if there is no extension, trade conditions will not revive until end of April or early May, as ports will take time to get back to normal operations,” a trader said.
Market sources said that local scrap prices have maintained a downward trend, losing INR 300/mt ($4/mt) week on week to INR 23,050/mt ($304/mt) ex-stockyard at Mandi Govindgarh in the north. Prices edged down INR 200/mt ($3/mt) to INR 21,200/mt ($280/mt) ex-stockyard at Alang in the west, but with sources pointing out that these prices are largely nominal in the absence of any transportation available in any of the regions and there has been no any volume booked nor delivered during the past week.