India’s imported scrap prices have increased during the past week in response to higher benchmark Turkish prices, but the downturn in the local rebar market has dampened the appetite for raw material restocking among secondary steel mills, resulting in very limited trades, SteelOrbis learned on Wednesday, August 5.
Falling local rebar prices and supply and distribution chain disruptions owing to new regional lockdowns are prompting secondary steel mills to ease production capacity utilizations and hence the lack of imported raw material trading activity. Traders said that, with business activity picking up in the Gulf region matched by renewed buying of scrap in Turkey, ex-US scrap offers to India have edged up marginally, resulting in only a few large secondary mills entering into fresh supply contracts.
Sources said that ex-US containerized shredded scrap prices have increased to $285-295/mt CFR Nhava Seva port in the west, compared to deals concluded in the range of $280-290/mt CFR in the previous week.
A large Maharashtra-based electric arc furnace-based steel mill has concluded a deal for an estimated volume of 20,000 mt of ex-US shredded scrap at $285-290/mt CFR Nhava Seva.
A Gujarat based-medium scale secondary steel mill has reported a deal for ex-US bulk HMS I/II scrap totaling around 30,000 mt at $280/mt CFR Kandla in the west, compared to similar deals concluded in the range of around $272-274/mt CFR in earlier weeks, the sources said.
According to a steel sector analysts at a Mumbai-based financial advisory firm, billet prices have been increasing driven by strong exports, but secondary steel mills largely depend on captive conversion of rebar and local sales, and hence any revival in imported scrap buying activity at current higher levels is critically dependent on rebar prices bouncing back and on the easing of supply chain uncertainties.
“Secondary mills are facing a tight liquidity situation and, even with lower plant capacity utilizations, they are cautious in committing fresh import scrap bookings. Indications are that scrap prices will seek higher levels in future deals in reaction to higher semis and finished steel prices. Buyers will continue to conserve cash, lowering their raw material bookings,” a member of the Metal Recycling Association of India (MRAI) said.
The lower interest in raw material is reflected in further marginal losses in the local scrap market too, according to market sources. Scrap prices have lost INR 200/mt ($3/mt) to INR 21,600/mt ($288/mt) ex-stockyard at Mandi Govindgarh in the north, while they are down INR 100/mt ($1.30/mt) to INR 20,700/mt ($276/mt) ex-stockyard at Alang in the west.
$1 = INR75.00