Indian Scrap Market Lacks Support Despite Declining Imports

Irrespective of declined imports, limited fresh bookings, and prices softening further, the Indian Scrap market continues to experience sluggish trends. Scrap prices decrease can be attributed to weak Steel demand and falling prices, which has forced Scrap suppliers to keep their prices lower, despite maintaining a steady supply.

Latest Updates

Here are the latest Scrap market updates in India:

• Declining Imports- Ferrous Scrap imports in India were recorded at about 15 lakh tons in January 2023. Imports have been continuously declining since then, with recent imports amounting to approximately 8 lakh tons per month from February 2023-April 2023. Furthermore, it is expected that imports will decrease further in May 2023, with projections indicating that they will be less than 5 lakh tons. However, the exact numbers for May 2023 are yet to be released.

• MS Scrap Flat Demand- During the first week of June 2023, MS Scrap demand remained flat, primarily due to lower demand for finished products. There are no supply constraints in terms of volume, logistics, and quality, which is a positive aspect of the price scenario.

• Importers’ Losses Reducing Strategy- Indian importers had previously booked materials at higher prices, and now they are attempting to keep market prices higher to minimize the risk of losses. In April 2023, a few prompt bookings were reported by Indian importers when imported Scrap prices were higher by around $30-40/ton, depending on the origin, according to Ofbusiness sources.

• Low Steel Demand Impact- Steel demand in India remains low to moderate, which is also affecting Scrap demand and prices, despite a slight change in import offers.

• Price Decline- Billet prices have declined by Rs 300-1,000/ton and Scrap prices have witnessed a decline of about:
  • Southern Region- Rs 500-1,000/ton
  • North Region- Rs 300-600/ton
  • Western Region- Rs 500-1,000/ton
  • Central Region- Rs 200-400/ton
  • Eastern Region- Rs 200-500/ton
  • Note- The decline is on a week-on-week basis.

• HMS (80:20) Grade Scrap Offers- Here are the current prices:
  • Mandi Gobindgarh- Rs 39,500-40,000/ton
  • Ex-Raipur- Rs 38,000-38,500/ton
  • Durgapur- Rs 39,500-40,000/ton
  • Ex-works Alang- Rs 38,000/ton
  • Jalna- Rs 36,500-37,000/ton
  • Ex-Chennai- Rs 34,500-35,000/ton

• Import Offers Price Movement- Imported Scrap prices have remained volatile, with a week-on-week change of $5/ton. Buying activity through Turkey has been moderate, resulting in slight changes in global prices due to supply and demand dynamics.

• Fresh offers for HMS Scrap have been reported at $380-385/ton CFR Turkey. For Indian buyers, offers for European shredded-grade Scrap stand at around $430-433/ton, compared to last week’s price of approximately $430-435/ton CFR India

Market Outlook

As per the market participants, Scrap prices are likely to remain volatile due to modest domestic demand and falling imports. Since Indian buyers booked materials at higher prices previously, suppliers are expected to try to maintain Scrap market stability to reduce the risk of losses. Therefore, significant price changes in the short term are unlikely.

OFB’s Insight

The Indian Scrap market is facing challenges with declining prices and imports, attributed to weak Steel demand. Despite efforts to maintain supply, Scrap suppliers are forced to keep prices lower. The market outlook remains uncertain, with market participants expecting volatility and limited price changes in the short term.

Read more: How Indian Domestic Steel Market Performed In May 2023?

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