The domestic ferrous scrap market weakened further on Tuesday with finished steel demand showing no signs of recovery. Despite the Southwest monsoons starting their withdrawal, the hopes of demand generation in the construction segment in the immediate period seem to be fizzling out. As a result, scrap and sponge iron trades were extremely thin.
The bi-weekly Davis Index for HMS 1&2 (80:20) fell by Rs400/mt ($5.42/mt) from the prior Thursday to Rs23,600/mt ($319.79/mt) del Ludhiana mill, while the index for sponge iron declined by Rs650/mt to Rs21,550/mt del mill. Last week, an uptick in demand driven by a slight rise in ingot and billet prices had strengthened the market for a brief while. On Monday, however, prices started to lose their steam.
In other markets, the bi-weekly Davis Index for HMS 1&2 (80:20) fell by Rs700/mt to Rs22,800/mt del Jaipur mill, while the index for sponge iron declined by Rs450/mt to Rs20,850/mt del mill. The bi-weekly index for HMS 1&2 (80:20) fell by Rs200/mt to Rs24,550/mt del Raipur mill, while the index for sponge iron declined by Rs500/mt to Rs18,500/mt del mill. The indexes in both regions were weighed down by a lack of trades. A probability of Chinese sellers dumping flat-finished steel, especially HRC in the Asian markets has also dampened sentiment.
The daily index for HMS 1&2 (80:20) fell by Rs100/mt to Rs22,800/mt del Mumbai mill, while the index for sponge iron declined by Rs300/mt to Rs18,700/mt del mill. In Mandi Gobindgarh, the index for HMS 1&2 (80:20) fell by Rs200/mt to Rs21,400/mt delivered mill, while the index for sponge iron settled at Rs21,000/mt delivered mill, down by Rs200/mt.
Most secondary mills are now in a state of distress. Since the COVID-19 pandemic, the steel market has grappled to gain a foothold. Adding to their woes of weak sales, was the pressure of buying raw material, especially ferrous scrap at increased price levels amid shortage and a rise in global ferrous markets. In the long term, however, major automaker Maruti Suzuki expects good growth which could bring some respite to the steel market.
($1=Rs73.79)