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Ferrous scrap exports to India seen softening

Keywords: Tags  scrap, ferrous scrap, exports, India, Bangladesh, Pakistan, Sean Davidson

NEW YORK — U.S. exports of containerized ferrous scrap to India may come under pressure as weaker demand for certain finished products in India and currency fluctuations have left some buyers hesitant.

"Indian markets are really messed up. There is no demand for finished steel. Construction is very slow, and most steelmaking units are losing money on every ton they are producing," one source said.

Sources in the United States, United Kingdom and India reported sales of U.S. containerized shredded scrap into Nhava Sheva in a range of $424 to $430 per tonne c.f.r. this past week, and while prices were relatively unchanged compared to the previous week, many say they are likely to come under pressure, especially if the Indian rupee continues to struggle against the U.S. dollar.

A second source cited regional power shortages and low Indian mill capacity rates of between 50 and 60 percent as another reason for a possible softening in scrap tags.

"The domestic finished D-bars and billets are down even after mills (began) operating at 50 percent production. The demand of finished steel is very poor and the government contracts and large projects are in a limbo. Now with the dropping off in Turkish demand, the prices are again turning soft on scrap," said a third source.

However, while many agreed export prices of containerized ferrous scrap to India were due for a softening, a number of sources confirmed the apparent weakness may not be the same in every Indian port. Mumbai’s Nhava Sheva port, for example, is said to be experiencing more strength than the southeastern Chennai region.

"I have a mixed feeling on India," the second source said. "It’s more positive in the Nhava Sheva region, mainly bearish in Chennai region. Most people expect a price softening by $15 to $20 per tonne."

Others said they expected any weakening to be short-lived.

"Demand has been good from certain mills, but most of them are still keeping away from the market due to a poor demand in finished products and the strong dollar. However, I see things now improving, and buyers should be back in the market," a fourth source said.

Meanwhile, a fifth source said it isn’t Indian steel mill weakness leading to a possible decline in U.S. export prices, but rather the fact that scrap from the United Kingdom is proving more economical in today’s market.

"Scrap demand from Indian mills is good. It seems like U.K. export is the most attractive to India at the moment. (Shred) prices from there are around $428 to $430 per tonne c.f.r. Nhava Sheva. U.S. East Coast exporters are now looking for $435 per tonne c.f.r. and more. The market from the U.S. seems strong and they are expecting December prices to move up further," he said.

Meanwhile, export sales of an 80/20 mix of No. 1 and No. 2 heavy melt were reported into Nhava Sheva in a range of $405 to $415 per tonne this past week, with export sales of turnings in a $375- to $385-per-tonne range c.f.r. Nhava Sheva.

In India’s neighboring markets, Pakistan is suffering from similar power shortage issues and has picked up shredded scrap at anywhere between $415 and $430 per tonne, sources said, while to India’s east, Bangladesh has reported recent liquidity issues, but the outlook is said to be turning up.

"My impression was that the mood (in Bangladesh) was not so negative. Steel mills are mainly supplying from local ship-breaking yards at levels of $425 to $428 delivered," a source said.

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