NEW YORK The
weakening of the Indian rupee against the dollar brought
containerized ferrous scrap exports to India to a complete
standstill this past week.
Poor demand from
Indian mills, the recent introduction of an import duty and
elevated currency exchange rates had culled exports to India by
nearly 75 percent a week ago, according to some sources.
Since then, the rupee
deteriorated from R55 to the dollar to almost R60, completely
halting container exports to India from the United States, the
United Kingdom and continental Europe.
The last reported
sales of containerized shredded scrap were concluded about
seven to 10 days ago in a range of $368 to $370 per tonne
c.f.r. Nhava Sheva, with heavy melt about $20 lower.
However, bids and
offers have since moved in opposite directions as strengthening
prices to Turkey encouraged sellers to raise their offers by
about $5 per tonne while a weakening Indian currency forced
Indian buyers to lower bids by about $10 per tonne, according
to various sources.
This development has
frozen trading and forced U.S. exporters to look to other
markets. "We have shifted our focus to Indonesia and Pakistan,"
one U.S. exporter said. "Indonesian mills are paying $373 to
$375 per tonne c.f.r. for shred, and the freight to them is
lower than that to India. Pakistani mills are paying $5 above
that range. We have no sales to India."
Some sources suggested
that current Indian bids are between $355 and $365 per tonne,
with no exporters ready to bite, while others said there were
no firm bids.
"Today, no one will
buy even at $365 as pig iron is a far more viable option," one
trader in India said.
A second trader said
there were absolutely no bids from Indian mills at the moment.
"With the devaluation in (the) rupee, even these prices appear
difficult to achieve now," he said. "There are no bids. Every
buyer is in a wait-and-watch mode. The dollar has appreciated
from 55 to 60 in a few weeks. However, finished product sales
prices have not increased by even a rupee. I believe rather
than buying raw material, the remelters will now focus on
increasing prices of finished product."
A third source in
India said part of the demand deterioration is seasonal.
"Indian mills are not buying anything due to a strong dollar,
dull demand for finished products and huge conversion losses,"
he said. "Usually during the monsoons this is the scenario, and
I guess it will take at least two months for Indian mills to
get back to normal buying. Many mills are cutting their
production and some are also shutting down."
A fourth India-based
source agreed. "Most mills have cut back production due to
slack demand of finished goods," he said. "Prices for shredded
in the international market (in the) past week to 10 days were
around $368 to $370 c.f.r. Nhava Sheva, but with recent deals
in Turkey and U.S. domestic showing a bit of strength, foreign
sellers are trying to push through price increases for July.
(Its) very doubtful Indian steel mills will pay any price
increase as of now."
Kingdom-based exporter said currency exchange rates are a clear
red flag for Indian buyers currently. "We are seeing the Indian
rupee touch 60. This is a big dont buy signal
for the Indian guys," he said. "There was some really low
prices knocking around, but we dont know of anyone that
sold. I think the general view is the market has bottomed.