Dismal demand spurs cuts in Indian steel mart

Jul 23, 2013 | 06:25 PM | Sean Davidson

Tags  India, steel market, ferrous scrap market, weak demand, furnace shutdowns, ferrous scrap exports, ferrous scrap prices, monsoon season weak rupee

NEW YORK — Bleak conditions in the finished steel market coupled with a weak Indian currency have forced several mills in India to cull production rates and scrap intake as they look to weather losses, according to market participants.

Several scrap-based steel producers in India have lowered utilization rates to 50 percent or under as finished steel cries for demand, sources said.

A weak Indian rupee and reasonably healthy scrap markets in the United States, Britain and some parts of Europe have widened the bid and offer gulf between exporters and importers and resulted in little or absolutely no trade for more than a month.

Although the monsoon season in some parts of India has resulted in a seasonal drop in demand and production, conditions are direr than normal, with production cuts more severe and demand from many smaller producers a fraction of historical levels, sources said.

"With monsoon in full swing and very less demand for finished products, the long-steel products industry is doing really badly, with high input costs and less margins for conversion and dull sales. On average, furnaces are losing up to $30 to $35 per tonne on conversion from scrap to billet at today’s scrap prices. But most are still receiving scrap which was purchased in May and June at higher levels, so losses are even greater," one importer in India said.....

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