Imported shredded scrap prices in India were under pressure on Wednesday amid weak domestic cues.
Indian buyers refrained from trades since finished steel demand has failed to pick up. Demand in the auto sector, however, is on the mend, the only positive amid weak domestic fundamentals.
But mills are likely to resume bookings soon, only to keep up their production as inventories of ferrous scrap have started depleting.
In Turkey, the index for US-origin HMS 1&2 (80:20) settled at $300.50/mt cfr Turkey on Tuesday, down by $0.13/mt from Monday. Turkish mills have started offering rebar in the US market at marginally lowered prices as buyers refused earlier price levels. Ferrous scrap bookings also have paused, albeit for a brief while. Suppliers, however, have kept their offers firm with a belief that prices are unlikely to fall much as supply remains tight. South Asian buyers are thus waiting for clarity in the price direction from the Turkey market.
The daily Davis Index for containerized shredded settled at $319.25/mt cfr Nhava Sheva, down by $0.13/mt. Bids for shredded were at $315-318/mt cfr Nhava Sheva with no supplier interested in those price levels.
Indian buyers are unlikely to book material if prices do not decrease since present levels remain unviable. But yards and traders believe a steep drop in prices is less likely and thus few suppliers kept offers for containerized shredded unchanged at $320-325/mt cfr Nhava Sheva and Mundra.
The Davis Index for HMS 1&2 (80:20) of UAE-origin settled at $307/mt cfr Nhava Sheva, Tuesday, flat from Tuesday. Deals for Dubai-origin HMS 1&2 (80:20) were at $305-308/mt cfr Nhava Sheva. Mills’ bids, however, were not over $300-302/mt cfr Nhava Sheva. Scrap grade #1 HMS from Dubai traded at $310/mt cfr Nhava Sheva despite offers of $315/mt cfr Nhava Sheva.
A few buyers stayed away from importing from the UAE, with the government extending the ban on exports of steel scrap by another four months till Jan 2021. Many suppliers have managed to keep selling in the overseas markets despite such a ban. Of late, however, UAE’s exports have dipped due to weak demand in the Indian subcontinent. A few trades for HMS 1&2 (80:20) from Australia and Brazil were reported at $300-305/mt cfr Nhava Sheva.
The index for US-origin HMS 1&2 (80:20) settled at $307/mt cfr Nhava Sheva, down by $0.5/mt from Tuesday. Indian buyers were not keen on booking material from the US, which takes two months at the minimum to arrive, against the delivery period of 10 days from Dubai.
Collection rates in the US have declined. Further lending support to prices for ferrous scrap in the country was the bullish finished flat steel market with prices rising by around $40/mt since the beginning of the month. US yards thus preferred to sell in the domestic market.
Indian HRC prices rose by Rs2,500/mt in September to reach Rs40,500-41,000/mt ex-plant. But slowed import interest in China kept offers rangebound at $525-535/mt fob India. Recovering domestic auto demand could support HRC prices in the coming days.
In the bulk market, offers from the US west coast were heard at $320-325/mt cfr Kandla, however, mills were unwilling to raise their bids over $300/mt cfr Kandla.
In the domestic market, weak demand and limited construction activity pressured scrap prices. Barring major steel producers, most mills are still operating at 60-80pc capacity. Small and medium-scale electric arc and induction furnaces are struggling to find a foothold in the competitive market. Amid pressure on their profits and strained cash flow, mills are waiting for prices to drop before restocking scrap.
The Davis Index for containerized shredded, Wednesday, settled at $312.15/mt cfr India subcontinent, up by $0.33/mt from Tuesday. The daily Davis Index for containerized US-origin HMS 1&2 (80:20) settled at $299.72/mt cfr India subcontinental, up by $0.36/mt. Most suppliers were resisting to offer material at lower prices amid tight supply.