NEW YORK - A
near-standstill in demand for containerized ferrous scrap from
India has sent U.S. containerized export prices to the country
The recent introduction of an
import duty on ferrous scrap shipped to India (
amm.com, May 9) has weakened sentiment, but many
market participants suggest the fallout on prices from this
trade barrier will be short-lived.
Sources pegged containerized
shredded scrap trade at $385 to $390 per tonne this past week
for scrap delivered to Indias western port of Nhava
Sheva, with bids and offers reported within $5 of that range.
Very little has reportedly traded in this price range, which is
down about $20 from late-April levels (
amm.com, April 30). One Indian importer reported a
purchase of containerized shredded scrap at $380 per tonne
c.f.r. Nhava Sheva, while a source at a large exporter
suggested that $380 per tonne appeared to be the next price
The coming week would bring
clarity on price direction, market sources said, but many were
divided as to what impact the 2.5-percent import duty would
have. Some said it had paralyzed demand from India, while
others said it had a minor impact in a market that is still
suffering from weak production levels due to poor demand for
The buying has slowed down
due to various reasons and not just the import duty, a
second Indian exporter said. Yes, the import duty does
have an effect on buying price, but in a few days the impact
gets absorbed. The factories have pressure on conversion
margins and hence they are cutting production to minimize their
losses, as they have been losing money for quite a few
The Indian government introduced
the tax in an effort to boost consumption of domestically
produced direct-reduced iron (DRI), known in India as
sponge iron, market participants said.
A scrap buyer for a larger
Indian steel producer said that complaints about the import
duty were misplaced. Every end-user will complain to
anyone who will listen about the duty, but what is the
alternative? DRI can only be used so much to replace scrap. And
they would need to change their product portfolio
slightly, he said.
Domestic sponge iron
manufacturers are having a field day and have raised prices of
local sponge iron, (and) there is pressure on international
scrap suppliers to reduce prices further, a Mumbai-based
trader said of the dutys impact.
A large exporter of European
scrap said the impact would vary for each buyer. High-end
producers will be able to absorb it and should be able to pass
it on, he said. Ingot guys will have difficulties
(absorbing) it, although later on it will be considered in the
price calculation. Demand is moderate, but confusion in the
international market is causing many customers to hold their
A fifth India-based source said
that poor market conditions have hurt scrap demand.
Steel offtake is poor, the
dollar is stronger and the euro is weak, he said.
Speculation is that scrap prices may soften further. The
import duty further dampens sentiment. U.S. markets are also
pretty soft and offering lower rates.
The Indian market went silent
after the import duty was announced, one U.S. exporter said.
Immediately after the announcement that the duty had been
enacted, offers disappeared and prices dropped $10 to
$20, he said. Offers have returned slowly, however,
(but are) still way below domestic pricing.
Another U.S. exporter expects
the duty to have a short-term impact on buying strategies.
In the long run, the duty will be absorbed and the buyers
will pay the market if they want and need to
purchase material, he said. The bottom-feeders are
beginning to come out and I have received numerous calls ...
inquiring about material. We do not like the price and have
countered, but at this point, no takers.
Meanwhile, sources expect very
little demand for container scrap from Indias eastern
port region of Chennai due to the imminent arrival of two bulk
vessels and continuing production issues due to poor power