Ferrous scrap prices which remained under pressure last week, opened bullish this week. The rise in prices was supported by an increase in demand from local mills.
Primary producers in India have raised HRC prices by a maximum of Rs2,000/mt in the domestic market due to increased demand in the automobile sector. Amid hopes of a rise in auto sales during the upcoming festivals like Navratri and Diwali in India, most automakers have ramped up production. Tata Motors, for instance, is expanding car production by 18,000 units to meet the expected demand in the Sep-Nov period. This optimism has also percolated in the scrap market.
The Davis Indexes for HMS 1 &2 (80:20) increased by Rs500/mt ($6.82/mt) from Friday to Rs22,200/mt ($302.96/mt) del Mandi Gobindgarh mill and Rs23,400/mt del Mumbai mill. The index for sponge iron rose by Rs350/mt to Rs21,350/mt del Mandi mill and by Rs1,000/mt to Rs19,300/mt del Mumbai mill.
With exports of iron pellets to China rising, its availability in Indian market has dipped. A resulting rise in pellet prices has thus increased sponge iron prices.