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

Stainless steel scrap prices are likely to keep rising in the coming months on the back of a projected demand surge in India. Prices in the first week of November for 304 (18-8) solids are between $1,300-1340/mt cfr India port and are projected to be rangebound in the coming weeks, said several traders in India, or are likely to climb further. Demand for 304 exceeded demand for 316, according to traders, post-August. 316 solids are usually $600-650/mt higher than 304. 


Most mills in India were eyeing for a price drop-in scrap rates as prices were deemed too high which squeezed the mill’s margins. Prices of 304 and 316 solids have risen consistently in the last six months on the back of high nickel prices and improvement in demand post-COVID-19 lockdowns. Indian economy’s slow yet gradual recovery from COVID-19 pandemic has resulted in improved demand from railways, infrastructure, auto and home appliances sectors. 


The Davis Index for stainless steel scrap 304 (18-8) rose by 24pc in the first week of November from May first-week levels. The jump in scrap prices are pressuring margins of mills in India and mills are not ready to buy in bulk at these current rates. Scrap prices are up partially driven by LME nickel contract prices which are hovering near $15,506/mt as on Nov 5, marking an increase of 30pc from May first-week. 

The Davis Index for 304(18-8) solids is up 24pc to $1,310/mt cfr India port in a period of six months. Trendline indicates prices are unlikely to drop to near pre-COVID levels towards the end of 2020. 


Mills in India, since the end of September, held back buying healthy quantities citing the high price levels. Traders believe that this gap in scrap consumption is likely to result in pent-up demand in the coming months. Major steelmakers Jindal Stainless and Jindal Stainless Hisar reported a rebound in sales to pre-COVID levels in the September quarter. Jindal Hisar reported a jump of 9pc while Jindal Stainless reported flat sales volume, compared to the prior year, but the company is confident of demand improving in December quarter.


In September quarter, Jindal Stainless reported sales of 230,000mt, up 159pc from the prior quarter and Jindal Stainless Hisar sold 155,000mt in Q2, up 228pc from the previous quarter. Higher sales in Q2 by major mills could be attributed to better demand from infrastructure and home appliance sectors. With the easing of lockdowns, recovery in auto sales and resumption of restaurants and hospitality services, stainless steel demand is set to escalate. This demand boost would result in mills resuming procurement of healthy quantities of scrap which would support prices of scrap in the coming weeks. 


Effects of CVD on Indonesia SS flat products

A countervailing duty of 21-23pc is levied on SS flat imports from Indonesia since August. This resulted in domestic mills gaining market share in India. Low-priced imports caused a huge supply glut for SS flat products which pressured Indian mills’ margins. Recently, India Ratings has projected domestic stainless-steel production to rise by 5pc in 2020. They also stated that most mills are producing at 90pc capacity utilization. Domestic sales volumes are also to rise by 10pc in 2021, compared to the current year, said the report.

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