NEW YORK A
tumbling rupee has severely impacted ferrous scrap exports to
India, bringing U.S. shipments to the country to a complete
said Indian mills have not booked any U.S. scrap for at least
the past two weeks, while exports from Europe also have fallen
dramatically to barely a few containers.
With the Indian
currency falling to historic lows against the dollar on a
seemingly daily basis for the past few weeks, several small
steelmakers have been forced to close shop, sources said.
"We have not bought
scrap from the U.S. for the past three weeks and this has never
happened in my seven years of working in this industry, so you
can imagine how bad the India market is," said a source at one
of Indias larger scrap companies.
U.S. exporters and
traders said demand from India has been poor for several
months, but the plummeting rupee obliterated any trade in
Indian buyers of heavy
melt steel have released bids between $310 and $340 per tonne
for scrap delivered to India to compensate for the weakening
rupee, but they are significantly below U.S. offers, which
reportedly are at least $40 above that range.
The little that has
sold into India has come mostly from Dubai, Africa and the
Philippines in the past few weeks. One exporter said that even
Dubais exporters have turned their attention to
Indias neighbor, Pakistan.
volumes of shredded scrap reportedly have sold from Europe at
around $375 to $380 per tonne c.f.r., sources said.
"Things are not
looking very good in India due to poor demand, high currency
rate and sick government policies. Most of the small plants in
India are getting closed down or operating below 50 percent of
capacity," a source at another large Indian scrap company said.
"There is no containerized cargo movement to India and the
reason is a strong U.S. domestic market and the long transit
time, which buyers want to avoid due to a highly fluctuating
rupee. Currently, India is surviving on Middle East and Africa
due to short transit period and cheap material
Sources said that a
recent meeting between Metal Recycling Association of India
(MRAI) representatives and senior government leaders would do
little to alter the course. The meeting followed a letter MRAI
sent to Indias prime minister requesting removal of
recently introduced duties on some ferrous and nonferrous scrap
exporter said Indias import duties are a minor issue at
the moment. "To be honest, the import tax issue is not the
problem," he said. "If the rupee was at normal levels, the
Indian market would be buying. At the end of the day, their
buying power is awful and with interest rates the way they are
there it doesnt allow them to hedge. The people who are
making a killing are the ones buying finished casting and other
finished goods out of India right now."
One European exporter
said banks have started freezing credit from customers, while a
London-based exporter said he expects many more closures of
small induction furnaces in India. "The bigger electric-arc
furnaces will survive on sponge iron and limited scrap supply,"
An importer in India
was the sole optimist in the marketplace. "I think the worst is
over and soon the prices of finished products should start
improving in India," he said. "On the international front, I
believe prices should correct a bit and hence Indian mills,
which have not bought anything for over a month now, should
start buying aggressively in another two weeks."