Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Scrap and sponge iron prices in July registered an uptrend, mainly on global cues. Amid subdued economic activities, finished steel demand and prices could not support this rise. Most electric arc furnaces and induction furnaces thus struggled with narrowing spreads. 


In the month, secondary mills in the western part of India was working at 70pc of the capacity from around 50pc in June. The supply of finished steel, therefore, increased. End-users of steel, however, failed to generate enough demand to maintain a demand-supply equilibrium, distressing most steelmakers.  

Imported scrap prices in India in the period rose by about Rs1,500-2,000/mt cfr ($20-25/mt) while sponge iron increased by Rs2,000/mt ($27/mt). Rebar prices, however, increased by Rs500-1,000/mt ($7-14/mt) ex-works. As a result, the spread between billet and rebar contracted to Rs3,000-3,200/mt ($46-53/mt) at the end of July from around Rs3,500-4,000/mt ($46-54/mt) in early July.

Domestic demand is now on the path of recovery, state steelmakers as well as the Indian steel ministry. Stalled construction projects have resumed and are working at 60-70pc levels. In Mumbai, large infrastructure projects have also started gaining momentum due to increased spending by the government. Market participants, however, believe consumption of steel could reach pre-COVID-19 levels only after the next two quarters. 


Mumbai spread 

The spread between billet and rebar in Mumbai decreased to around Rs3,000/mt ($52.91/mt) on July 30 from Rs4,000/mt in early July. Billet prices in Mumbai increased by 6pc over the month, while rebar was up by 2pc. 

Raipur spread 

The spread between billet and rebar in Raipur decreased to around Rs3,000/mt on July 30 from Rs3,500/mt in early July. Billet prices increased by Rs1,500/mt in the period while rebar was up by just Rs1,200/mt. 

With the tally of COVID-19 cases in Chhattisgarh increasing every day, the state government has extended its lockdown till Aug 8. Finished steel trades thus remain hit since many retailers have shut shop. 

Spread (in Rs/mt)Mumbai Raipur
July 1, 2020July 30, 2020July 1, 2020July 30, 2020
Billet-rebar                    4,100                       2,900                 3,500                                  3,200 

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