INDIA IMPORT SCRAP: Robust finished steel demand prevents sharper fall in scrap market
India’s imported scrap markets have been supported by healthy demand for finished steel in the country this week, which prevented there being steeper losses in the scrap price, sources have told Metal Bulletin.
Prices for ferrous scrap in the important Turkish market have decreased by $9.70 per tonne week-on-week, but Indian import markets managed to limit their losses to less than $5 per tonne.
Metal Bulletin’s weekly index for containerized imports of shredded scrap into India was $366.16 per tonne cfr Nhava Sheva on Friday February 2, down by just $1.76 per tonne from $367.92 per tonne cfr last week.
“There is strong demand so, even if scrap prices go down, they won’t collapse. I don’t see a downtrend in the market as long as there is demand for finished steel,” one seller said.
“The demand for imported scrap in India has improved drastically. This is due to local scrap rates moving up, leading to price parity between local and imported scrap rates,” one buyer said.
One deal for around 1,100 tonnes of shredded scrap from the UK was heard at $365 per tonne cfr Nhava Sheva, while 1,500 tonnes of shredded were booked at the start of the week for $370 per tonne cfr.
Deals for 500 tonnes were heard at $360-367 per tonne cfr Nhava Sheva this week. Offers from the United States were heard at $365 per tonne cfr, while European offers were $370-375 per tonne cfr.
A bulk shipment containing mostly shredded scrap was sold by a US seller into the west Indian port of Kandla at $370-372 per tonne cfr this week.
Mills enjoy good times
Mills in India are producing at full capacity and are making good margins, market participants said, with their order books for the year being boosted further by huge infrastructure spending plans announced in the government budget on Thursday.
“After a difficult four-year period for steel mills in India, they have finally started making money and getting margins in conversions,” the buyer said.
“The price of finished goods both inside India and for short-sea export billet have not come down terribly, and have [dropped] less than [prices for] scrap. So I believe there are still good margins being made by mills,” one trader said.
“Demand for finished steel products is going up over here,” another trader said. “There are lots of orders for items such as gas pipes, and the stainless steel sector is picking up.”
Metal Bulletin’s price assessment for secondary rebar was 34,000-34,200 rupees per tonne on Friday, compared with 34,300-34,500 rupees per tonne last week.
Caution in buying
Purchasing activity has been reduced in the past week, with buyers uncertain whether the Turkish scrap market will fall further, sources said.
“People are only in for small volumes [and] are buying hand-to-mouth at the moment,” another buyer said.
If prices were to come down by another $10 per tonne, “there would be a good stream of imports,” he added.
“Buyers are holding off their purchases while the international markets are softening,” another seller said.
But producers can afford to take their time and do not need to rush into panic buys, according to the seller. “Mills can afford to wait. Last time they booked enough material, so they are secure until the month of March,” he said.
Prices for the lower-quality HMS 1&2 (80:20) grade of scrap narrowed downward by $5 per tonne week-on-week on February 2.
Metal Bulletin’s price assessment for imports of HMS 1&2 (80:20) was $330-345 per tonne cfr Nhava Sheva on Friday, compared with $330-350 per tonne cfr last week.
Middle East- and US-origin offers were heard at $340-345 per tonne cfr, while West African material was available at $330-335 per tonne cfr.
Market participants were taking positions on HMS-grade material, one trader said, with traders willing to pay more for US material because it would take longer to arrive - by which time they expect the scrap market to be higher.
“US material will arrive in one-and-a-half months from now, but Middle Eastern material will arrive in a few weeks, so people are paying a few dollars less for Middle East material,” the trader said.
HMS 1 import prices were heard at $354 per tonne cfr from South Africa and at $350 per tonne cfr from the Middle East, sources said.
With HMS 1 prices inching downward, there is no reason to pay a premium to buy shredded material, according to another trader.
“It’s quite simple for us: if Europe is offering HMS 1&2 at $340 per tonne cfr, then shredded is available from them at $360 per tonne cfr,” he said. But with few sellers accepting such a price for shredded, a stalemate has ensued in the market.