SOUTH ASIA STEEL SCRAP: Market rises but buyers hold back

Prices for shredded steel scrap imported into South Asia continued to rise on Friday May 7 but buyers were hesitant about booking material, sources have told Fastmarkets.

Fastmarkets calculated its steel scrap, shredded, index, import, cfr Nhava Sheva, India, at $478.96 per tonne on Friday, up from $468.83 per tonne one week earlier.

There were no deals heard on the market this week, but offers were in the range of $475-485 per tonne. This compared with deals at $465-470 per tonne the previous week.

“No one is buying at this price and we are not offering. Secondary steel production has taken a hit due to the oxygen situation. Buyers are resisting but India has options in [direct-reduction iron] and domestic scrap,” a seller said.

The Covid-19 outbreak in India and the resulting shortage of oxygen for medical purposes has meant that steel mills have diverted oxygen supplies to hospitals.

While there could be a drop in finished steel production, prices were expected to hold up due to a strong export market.

“We are sourcing from the domestic market. Availability of material has gone down and prices are as good as for imports – the gap between imports and domestic has been eliminated,” a buyer said.

“The secondary sector stopped production due to the shortage of oxygen, while the big steel plants have their own integrated oxygen plants,” he added.

“If there is a better price in Pakistan, why would they sell to India?” he said. “Finished steel prices in India are very strong, and going up because of the demand in China.”

On the US market, export prices to India were not sufficiently competitive compared with the stronger US domestic market.

A jump in prices on the Turkish scrap market also supported scrap prices in the South Asia markets.

Fastmarkets’ daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, rose to $488.83 per tonne on May 7, up from $448.47 per tonne a week earlier.

“Suppliers are holding back offers to see how the market settles, and are expecting it to rise further,” a second seller said.

“The Indian market is a little confusing because of lockdowns, and buyers are not sure whether to book material or not,” he added. “Finished steel sales have gone down and people are cutting production. No one is sure what will happen. There is a bare minimum of trading activity and no finance is available to buy raw materials.”

Fastmarkets’ weekly price assessment for steel scrap, HMS 1&2 (80:20 mix), import, cfr Nhava Sheva, India, was $440-465 per tonne on Friday, up from $410-435 per tonne one week earlier.

A deal was heard at $465 per tonne for HMS material from Dubai.

“We are going into lockdown now and scrap prices are going through the roof,” a mill source said. “We are still producing, and have permission to do so, but markets won’t have the demand. Only important projects will continue and there are automotive [sector] shutdowns.”

On the Pakistan scrap market, deals were heard at increasing prices but market participants felt that the market had been slow to react to the increases reported on the Turkish scrap market.

Fastmarkets calculated its weekly steel scrap, shredded, index, import, cfr Port Qasim, Pakistan, at $487.67 per tonne on May 7, up from $469.98 per tonne on April 30.

This week, deals were heard from $486 per tonne up to $492 per tonne later in the week, up from $468-470 per tonne the previous week.

By Friday, offers were as high as $500 per tonne, although there was no trading heard at this level.

“Pakistan has been slow to react to price increases, but now prices cannot be less than $500 per tonne,” a trader said.

Market participants were confident that $500 per tonne could be achieved for shredded scrap next week, but the Pakistan market was likely to close for a religious holiday for the entire working week.

“Pakistan cannot react that quickly to the market. There will be no business for the next five days but I don’t see any correction coming,” a second trader said.

“After the Eid holiday, shredded will be at $500 per tonne,” a seller said. “That’s what suppliers expect.”