Is Weakening Steel Demand Putting Pressure On Ferrous Scrap Industry In India?

The Ferrous Scrap industry in India is facing a tough time due to a drop in Steel demand, resulting in a decreased Steel price in India. This has put pressure on the Scrap industry, which saw a price recovery last week. The sluggish global market and a decline in substitute product prices have added to the industry woes, sources reported to Ofbusiness.

In this article, we will delve deeper into the reasons behind the drop in prices and its impact on the Steel industry.

Price Movement

• Melting Steel Scrap rate has seen a significant drop in the northern region of Punjab, with prices decreasing by around Rs 500/ton week-on-week.

• Steel Scrap prices in other parts of the country have also decreased by Rs 100-700/ton. This decline in Steel prices has resulted in HMS prices (80:20) grade to stand at around Rs 41,000-41,500/ton ex-works, Mandi Gobindgarh, Rs 40,000-40,500/ton ex-Raipur and Durgapur, Rs 39,300/t ex-works, Alang, Rs 38,500/ton in Jalna, and Rs 36,500-37,000/ton ex-Chennai.

Impact On Mid-Sized Mills In India

The decline in Steel prices and low Scrap buying by induction furnace mills in the region have forced Scrap suppliers to lower their prices.

• Billets Prices- Billets prices in India have declined by Rs 500-1,000/ton in the last 4-5 days, with a sharp fall of Rs 800-1,000/ton in west India (Gujarat and Maharashtra).

• Substitute Products- In line with the price movement of substitute products such as sponge iron and pig iron, the prices in central and east India declined by Rs 200-500/ton in the last 2-3 days.

• Thus, this has kept Scrap demand low with a decline in prices, ultimately leading to a drop in prices in the domestic market.

Imported Scrap Offers

The import offers for Scrap have remained volatile, with the latest offers for shredded grade standing at around $455-460/ton CFR India. The fluctuating import offers has turned trends subdued for the domestic Scrap industry.

Market Outlook

It is anticipated that domestic Scrap prices in India are likely to remain under pressure or volatile in the coming days as the availability of substitute products improves in the spot market along with weakened, uncertain trends in the global market, especially for Ferrous Scrap and finished Steel products. The mid-sized mills may continue to have a significant impact on the demand for Scrap and prices, and any change in Steel prices can significantly impact the Scrap market.

OFB’s Insight

The weakening Steel demand in India has put pressure on the Ferrous Scrap industry. The decline in Steel rates, low Scrap buying by mid-sized mills, and a decline in substitute product prices have led to a drop in prices in the domestic market.

The industry is likely to face pressure in the coming days as the availability of substitute products improves and global market trends remain weak or uncertain. In such a scenario, the industry will have to remain cautious and adapt to the changing market conditions to ensure its sustainability.

Read more: Why Pig Iron Demand In India Is Slowing Down?

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