Indian domestic ferrous scrap prices continued their uptrend on Tuesday. Of the myriad reasons, bullish imported scrap prices and shortage of domestic scrap played a major role. But mills believe these prices are unlikely to sustain. Especially after mills in Pakistan and Bangladesh, the two other major South Asian markets slow down purchases during Eid-Al-Aadha.

 

In Ludhiana, the bi-weekly index for HMS 1&2 (80:20) surged by Rs750/mt ($10.02/mt) from the prior Thursday to Rs23,700/mt ($316.66/mt) delivered mill and the index for sponge iron rose by Rs200/mt to Rs20,150/mt del mill. Though demand for billets and ingots is rising, it is not healthy enough to support the current prices for a long time believe mill owners. In Mandi Gobindgarh, the daily index for HMS 1&2 (80:20) rose by Rs250/mt to Rs21,100/mt delivered mills and the index for sponge iron settled unchanged at Rs19,800/mt del mill.

 

The daily Davis Index for HMS 1&2 (80:20) rose by Rs400/mt to Rs22,000/mt delivered mill and the index for sponge iron rose by Rs650/mt to Rs18,850/mt del mill.
 

In South India, the bi-weekly index for HMS 1&2 (80:20) rose by Rs500/mt to Rs22,500/mt del Chennai mills and the index for sponge iron rose by Rs1,500/mt to Rs18,500/mt del mill.

 

Tuesday was also marked by a spike in finished steel prices. But prices mainly increased as most producers tried to pass on the rise in input cost to end-users. In Durgapur, the bi-weekly index for HMS 1&2 (80:20) rose by Rs650/mt to Rs23,500/mt delivered mill and the index for sponge iron surged by Rs1,500/mt to Rs18,000/mt delivered mills.

 

An increase in sponge iron prices was a result of bullish iron ore prices. Mining leases in India expired a couple of months ago. Most iron ore mines are thus in a transition period and present leasees are expected to take charge in the coming days. The rise in iron ore prices is also a seasonal phenomenon in the monsoon months when rains hamper mining activity.

($1=Rs74.84)

 

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