Ferrous Scrap Prices In India Witness Downtrend Amidst Steel Slump

In recent weeks, the Indian Ferrous Scrap market has experienced a significant downturn, closely mirroring the decline in Steel prices of mid-sized (Secondary) mills. This downturn is impacting various downstream products and has prompted suppliers to take a pause. The fall in Steel prices is a primary factor influencing the current state of Ferrous Scrap prices in India.

Current Scenario

As of November 2023, the prices of Ferrous Scrap in key locations across north and western India have hit a month-low. The decline has been pronounced, with prices dropping by Rs 500-1,000/ton week on week and an overall decrease of about Rs 1,000-2,000/ton in November. Notably, prices for Sponge Iron and Billets have witnessed a more substantial decline, ranging from Rs 2,000-2,500/ton during November 2023.

Regional Insights

Let’s take a closer look at the current Ferrous Scrap prices in key Indian locations:

• Mandi Gobindgarh: Rs 35,500-36,000/ton (down by Rs 500-1,000/ton, week on week).
• Raipur: Rs 35,000-35,500/ton (down by Rs 500-1,000/ton, week on week).
• Durgapur: Rs 35,500-36,000/ton (down by Rs 500/ton, week on week).
• Alang: Rs 35,800/ton ex-works (a week-on-week decline of Rs 700/ton).
• Jalna: Rs 34,500-35,000/ton (down by Rs 500/ton, week on week).
• Chennai: Rs 33,000-33,500/ton ex-Chennai (Stable on a week-on-week basis).

Challenges Faced by the Industry:

• Limited Demand

The Scrap market is grappling with moderate trading activity due to declined Steel prices in the domestic market. The slowdown in buying interest in the Semi-finished Steel market has resulted in reduced demand for Raw Materials, including Ferrous Scrap. This trend is particularly evident in major consuming markets such as Maharashtra, Gujarat, Punjab, and Chennai, where Steel mills melt a significant percentage of Scrap, roughly 70% to 90%, to produce Steel.

• Imported vs. Domestic Cost

The prices of imported Melting Scrap (HMS 80:20) at Maharashtra’s Nhava Sheva Port are around $390-$395/ton CFR, equivalent to approximately Rs 35,000-35,500/ton (including freight and port clearance). In Mumbai, local Scrap prices for the same grade stand at Rs 34,000-34,500/ton. The high cost of imported materials has led some suppliers to hold their offers, anticipating an increase in rates. However, sluggish finished goods sales have resulted in lower buying inquiries, limiting the conclusion of deals and trade volumes.

Market Outlook

With a combination of strengthened imported Scrap offers and sluggish domestic demand, the domestic Scrap market is less likely to witness drastic changes. The market may, however, benefit from seasonal factors such as logistic and trade concerns during the winter season, especially for imported Scrap. The outlook suggests a cautious approach for suppliers and stakeholders in the Indian Ferrous Scrap industry amid these challenging market conditions.

OFB’s Insight

The Indian Ferrous Scrap market faces a challenging landscape marked by declining prices, limited demand, and a delicate balance between imported and domestic costs. While suppliers hold offers in anticipation of rate increases, the market outlook suggests a cautious approach, with potential benefits from seasonal global factors during the winter months.