NEW YORK U.S. export prices for containerized ferrous scrap delivered to India dropped over the past four trading days on poor demand and reports of two bulk sales from Australia to different Indian ports.
Market participants said that prices for containerized shred fell about $5 per tonne from two weeks ago to a range of $405 to $408 per tonne c.f.r. Nhava Sheva. Sources said that buyers have now stepped away from the market in hope that prices will fall to $400 per tonne or lower.
Meanwhile, a bulk cargo of 30,000 tonnes of shred originating out of Australia and Europe reportedly was bought by a large Indian scrap company at $409 per tonne c.i.f. Chennai, while a 45,000-tonne cargo of shred originating from Australia was booked at $400 per tonne c.i.f. Mumbai and Kandla, according to different sources.
The bulk deals likely will add to the price pressure on containerized shipments and affect containerized volumes. "It will further slow container traffic, making the market harder," one source said.
"A few days back, shredded deals were done at $405 to $408 in north India, but in south India it is $410 to $415," a second source said. "Prices are falling not only in India but throughout Asia due to weak demand for finished products. Most steel mills are under tremendous pressure to reduce scrap cost. Also, as Turkey is not so aggressive in the market for U.S. scrap, a lot of scrap dealers in the United States and Europe are looking for a window to sell at least some decent tonnages."
Sources said that heavy melt sales ranged from $385 to $390 per tonne late last week for an 80/20 mix of No. 1 and No. 2 heavy melt. But buyers this week have not responded to offers at $380 per tonne, according to a third source who offered British shred at $400 to $405 per tonne c.f.r. Nhava Sheva and HMS 1&2 (80:20) at $380.
"Even on these prices, there are not many buyers in the market," he said. "At present, sentiments are very weak."
"Sellers are at those prices, but buyers are looking for below-$400 levels," the first source said. "They feel a further decrease of $10 to $15 per tonne is possible. Flat products are dropping every day. However, I see the bottom hitting $390 to $395 for shred in containers to Nhava Sheva."
A broker in India said that Indian demand and scrap import prices have fallen rapidly in part due to the increased use of alternatives.
"A distinct change is that sponge iron is being used more and more in the westup to 80 percent in some cases. With the increase in sponge iron consumption, the demand for scrap has gone down, which consumers are meeting with the lowest-cost scrap they can buy," he said.
"In the last three weeks, almost 200,000 tonnes of pellets have arrived at Kandla port. This is all for making sponge iron" he said. "Thus, it can be said that there is a distinct change in consumption patterns, with consumption of scrap going down. In north India, demand for scrap has also been very poor due to very tight liquidity and low demand for finished product."
A buyer for an Indian steel producer confirmed that his mill had bought shred at $405 to $408 per tonne and HMS 1&2 (80:20) at $385. "I would normally not say this, but I believe that these price levels could actually stick," he said. "(The) Indian market is not heating up as quickly as some thought in terms of an Indian economic turnaround in 2013."
One U.S. exporter, however, was confident that prices will not slip below the $405-per-tonne level for shred delivered into Nhava Sheva.
"(Theres) not too much trading yet, as those numbers came in on Thursday and Friday of last week, but I do think you will see volumes moved at those numbers," he said. "It is just the suppliers adjusting, and with the new month knocking at the door, most suppliers will weigh their domestic options compared to export. That being said, I believe you will see much more volumes out of the United States this month."