Domestic ferrous scrap prices were on a downtrend for a second successive week. In the six months ending December, primary mills had raised finished steel prices by over 50pc while secondary mills had increased them by around 20-25pc. The price rise has stalled many infrastructure projects in the country, dragging down steel demand. Finished steel prices have thus come under pressure.
In South India, the bi-weekly index for HMS 1&2 (80:20) declined by Rs1,375/mt ($18.84/mt) to Rs29,125/mt ($399.07/mt) del Chennai mill amid continued muted demand. Market participants are bearish for the near term. Most steelmakers have stayed away from Sponge iron purchases as they found present price levels unviable. Producers were thus pressured to lower their asking prices, while some Sponge manufacturers even offered a Rs2,000/mt discount to avoid dealing with cancellations. The index for Sponge iron declined by Rs1,050/mt to Rs25,000/mt del Chennai mill.
The bi-weekly Davis Index for HMS 1&2 (80:20) declined by Rs1,000/mt to Rs26,500/mt del Hyderabad mills and the index for P&S 5ft fell by Rs1,500/mt to Rs27,500/mt del Hyderabad mill. Prices also declined due to the weakening global cues.
In Mumbai, the daily Davis Index for HMS 1&2 (80:20) declined by Rs550/mt to Rs26,750/mt del mill. The index for Sponge iron fell by Rs350/mt to Rs25,350/mt del mill with a decline in sales.
In Ludhiana, the bi-weekly index for HMS 1&2 (80:20) and busheling fell by Rs250/mt each to R28,000/mt del mill and Rs30,750/mt del mill, respectively. If the weak finished steel demand persists, small-scale mills could soon decide to cut production to avoid stockpiled inventories. The index for Sponge iron declined by Rs1,000/mt to Rs27,600/mt del mill. The daily Davis Index for HMS 1&2 (80:20) dropped by Rs350/mt to Rs26,850/mt del Mandi Gobindgarh mill, while the index for Sponge iron fell by Rs450/mt to Rs25,600/mt del mill with limited buying.
In Indore, the bi-weekly indexes for HMS 1&2 and Sponge iron fell by Rs1,000/mt from Tuesday to Rs27,000/mt delivered mill and Rs25,500/mt delivered mill, respectively. Besides a plunge in finished steel trades, a decline in imported scrap has also pulled down the domestic scrap market.
In Jalna, most mills preferred to buy scrap over Sponge iron, prices for which remain unworkable for many. The bi-weekly index for HMS 1&2(80:20) dropped by Rs1,200/mt to Rs26,800/mt del mill and the index for Sponge iron dropped by Rs200/mt to Rs26,800/mt del mill.
($1=Rs72.98)