Domestic ferrous scrap price trends in India were mixed on Thursday. Sponge iron prices were flat to up.
The bi-weekly Davis Indexes for HMS 1&2 (80:20) and sponge iron both rose by Rs500/mt ($6.65/mt) from Tuesday to Rs22,500/mt ($299.10/mt) and Rs19,500/mt del Ludhiana mill, respectively. In Jaipur, the index for HMS 1&2 (80:20) rose by Rs200/mt to Rs21,300/mt del mill and the index for sponge iron was up by Rs1,000/mt to Rs19,450/mt del mill.
Finished steel demand in India remains under pressure with a ripple effect on scrap trades. Funds from government infra projects have been diverted for COVID-19 mitigation measures, which has stalled these projects, in turn weighing down finished steel demand. Mills state raw material prices seem to be rising driven by global cues, while finished steel prices remain largely flat, affecting spreads. A clear picture of market fundamentals is yet to arise.
In Mandi Gobindgarh, the daily index for HMS 1&2 (80:20) rose by Rs100/mt to Rs20,400/mt del mill and the index for sponge iron settled unchanged at Rs19,500/mt del mill. Mills in both these regions are working at lower than usual capacity with many adopting the ‘just-in-time’ approach towards inventories.
While the daily Davis Indexes for HMS 1&2 (80:20) and sponge iron settled unchanged at Rs20,650/mt and Rs16,500/mt del mill, respectively. In western India, finished steel inventories with some mills is significantly high, said traders, which could weigh down prices in the near term, since demand from infras and real estate sectors may take some time to recover.
The bi-weekly index for HMS 1&2 (80:20) in the South Indian market of Chennai settled unchanged at Rs22,000/mt del mill and the index for sponge iron rose by Rs200/mt to Rs16,200/del mill. The construction sector in this area is likely to commence activities sooner compared to the other parts of the country. The city receives heavier rain from North-Eastern monsoon winds which usually make landfall around October. Besides the pandemic, ongoing Southwest monsoons have also slowed down construction activities.