Indian secondary steel mills have virtually stopped restocking imported scrap as they are disappointed with the lockdown extension and since trading sentiments have been impacted by the uneven implementation of the waiver of container detention charges. As a result, imported scrap prices have declined sharply, SteelOrbis has learned on Wednesday, May 6.
There are reports in the market that at least one import contract was cancelled by a secondary steel mill and a trading firm once the lockdown extension was announced, indicating that buyers are cautious as regards carrying raw material inventories over a prolonged period and given speculation that the lockdown could be extended further once the current round nears an end on May 17.
Market sources said that an ‘advisory’ notice issued by the Directorate of Shipping (DGS) that shipping lines should waive container detention charges has not been implemented by all shipping companies and several steel mills have been unable to complete deliveries in the face of a liquidity squeeze and several shipping lines have not been willing to waive detention charges.
The sources said that, while leading shipping companies like Maersk and MSC had waived container detention charges, most other shipping companies had contested the DGS advisory notice claiming that the government did not have authority over shipping lines and that it was not legally binding on shipping contracts entered between two parties.
According to the Metal Recycling Association of India (MRAI), as of the end of April, about 200,000 mt of scrap in containers (ferrous and non-ferrous) were stuck at ports across the country and Inland Container Depot (ICD) operators were not waiving demurrage, ground rent and other charges, and importers did not have sufficient cash flow to meet these costs with their plants either idling or operating at minimal capacities.
Market sources said that ex-UAE shredded scrap prices have fallen to the range of $245-255/mt CFR Nhava Seva port in western India, down from $260-265/mt CFR in the previous week.
The sources said that just one contract has been concluded by a Gujarat-based secondary steel mill at $246/mt CFR Kandla port in the west.
Ex-EU shredded scrap offers have declined to $255-260/mt CFR in India, $10-15/mt below the levels reported last week.
The sources said that US-based freight forwarders are not willing to receive bookings for Indian ports, fearing that the extended lockdown could lead to more cases of cancellation of import contracts and abandonment of consignments by importers and shipping lines at the end of defaults.