NEW YORK East Coast containerized ferrous scrap exports to India have hit a wall as U.S. suppliers push for higher prices and buyersciting a strong dollarhope for some reprieve.
Market participants in the United States, the United Kingdom and India pegged the current price level for containerized shredded scrap at somewhere between $420 and $425 per tonne c.f.r. Nhava Sheva, based on bids from the few buyers in the market. However, actual deals from the East Coast have been few and far between as market players find themselves unable to agree on a price.
"The real market is at around $425 per tonne, delivered Nhava Sheva. Buyer offers are at that level, but we have not made any sales because U.S. suppliers are asking for $385 per tonne f.a.s. East Coast. If you catch freight at $40, that puts the net cost at $425, so something has to give," one U.S. exporter said.
"I think suppliers will have to go down because Indian buyers will not move, nor will Turkey raise prices. The dollar is so strong (that) you cant export much. So (the) price has to go down if people want to make sales," he added.
U.S. suppliers have also held onto material in anticipation of a stronger domestic market next week, sources said. As a result, the impasse between suppliers and exporters to India is expected to continue until domestic trade for March settles.
"We are still around $420 c.i.f. Nhava Sheva, but there is a general consensus of strengthening prices," a second exporter reported. "With that said, I dont see much more than $5 to $10 of additional upside, as fundamentals in India have not shown enough improvement to justify anything more. Turkey is up, but with the same kind of sentiment that finished good sales are not strong enough to keep the momentum going."
A third source, however, said that he does not expect the Indian market to strengthen at all, as the steel sector is suffering the effects of bad government policy and demand remains weak.
At the same time, a stronger dollar and weaker euro and pound have led more countries outside the United States to export to India due to currency affordability, he added.
A scrap exporter from England confirmed this development and said that he had concluded sales into Nhava Sheva in a range of $410 to $415 per tonne for shred, with heavy melt sales $15 to $20 below those levels.
"There is some interest in India for buying, but (the) Indian market is range-bound, with shredded between $410 and $420 for the last couple of months," another exporter said.
"It is very difficult to predict the market direction, as there is still low demand and low supply. The key reason for (a) price increase is the shortage of supply, which should get normal as we approach spring and summer," he added.
A source in India confirmed that markets there have been relatively quiet, with very few buyers purchasing small quantities.
"It does not seem like markets will improve anytime soon, as excess capacity and lack of demand in finished products are causing many plants to either cut production or shut down," the Indian source said. "Its a difficult phase now for the steel industry."
However, Indias finance ministry was set to deliver an annual budget Feb. 28, which several sources said could turn things around if it includes positive measures for the sector.