Local Indian scrap prices continued to edge down during the past week, although the pace of the decline has eased slightly largely based on lower containerized arrivals at Mumbai port, traders said on Wednesday, August 21. Import prices are unchanged since last week, but a further decline is expected due to weak demand and negative sentiments globally.
According to market sources, the price of scrap (HMS I/II 80:20) is down INR 500/mt ($7/mt) week on week to INR 23,500/mt ($328/mt) ex-stockyard at Mandi Govindgarh in northern India. Scrap prices are down INR 200/mt ($3/mt) week on week to INR 23,000/mt ($321/mt) ex-stockyard at Alang in western India.
The secondary steel mills producing through the electric arc furnace route (EAF) have sharply reduced their scrap intake as several producers have lowered capacity utilizations and cut variable costs in face of the steady weakening of prices of their predominant production of bars and rods, the traders said.
The fall in scrap intake has been the sharpest across furnaces located in the northern region which have been faced with rising energy costs which could not be offset by falling prices of finished products, the traders added. At the same time, the rise in key input costs for EAFs like graphite electrodes has increased the cost of EAF-based production by between 1-5 percent depending on furnace capacities, with this situation aggravated by lower margins in long product sales against the backdrop of depressed market conditions, the traders said.
Imported scrap prices for ex-UAE HMS I/II 80:20 have remained at $290/mt CFR Nhava Seva port in western India and the number of containerized arrivals have been far less than seen earlier in the month, SteelOrbis is informed. Offers ex-US have been at $300/mt CFR and above.
But the sources said that imported scrap will continue to put pressure on local scrap prices as in most global markets scrap prices are being weighed down by softening finished steel prices and even a slight increase in container arrivals will force domestic scrap prices to incur further losses.
$1 = INR 71.49