India’s imported scrap trading activity has suffered setbacks during the past week amid a combination of higher prices from tighter availability and the firming up of freight rates, which together have negated much of the benefits of the recent reduction of the import duty to nil, SteelOrbis has learned from trade circles on Wednesday, February 24.
The trade sources said that imported scrap prices in India have increased to $425-435/mt CFR Nhava Sheva port in the west, compared to trades concluded in the range of $415-420/mt CFR in the middle of last week.
Trade circles pointed out that the return of Chinese buyers after the holiday, the uptrend in finished steel prices and the dip in scrap availability have pushed up prices, with the rebound in oil prices leading to higher freight rates, significantly contributing to higher CFR prices. They said that, while secondary steel mills had revived fresh bookings since early this month, their appetite for restocking has taken a hit since the recent gains in imported scrap prices have to a large extent negated the benefits of the zero import duty rate effected recently.
It has been pointed out that higher oil prices have pushed up freight rates for US-India transportation by around $8-10/mt over the past one month, not only increasing CFR rates offered by exporters, but securing vessels has also become a challenge, making delivery commitments uncertain.
“Chinese buying of scrap after holidays has not been as strong as expected. China is preferring to import billets rather than scrap. This trend, though, has led to stronger scrap prices in other Asian markets, which are billet exporters. Indian secondary mills are, however, not in a position to restock raw materials at higher prices owing to liquidity challenges, despite the emerging revival of rebar and billet prices,” a member of the Metal Recycling Association of India (MRAI) said. “Imported scrap prices and freight costs had been rising too fast. Secondary mills are waiting for local rebar prices to consolidate at higher levels, which would give them the option to absorb higher scrap prices,’ he added.
Sources said that a Maharashtra-based secondary steel mill has reported a stray deal for ex-US shredded scrap for May delivery at a price of around $425-430/mt CFR Nhava Sheva.
Another Gujarat-based steel mill reported a trade for ex-UK shredded scrap at around $430-435/mt CFR Kandla port, the sources said.
Mirroring the uptrend in imports, local scrap prices have also edged up upwards, gaining INR 500/mt ($7/mt) to INR 38,500/mt (531/mt) ex-stockyard at Mandi Govindgarh, while they have gained INR 250/mt ($3.50/mt) to INR 32,750/mt ($451/mt) ex-stockyard at Alang in the west.
$1 = INR 72.50