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Indian steel scrap market divided

Keywords: Tags  steel scrap, ferrous scrap, scrap exports, India market, heavy melt, shredded scrap, Sean Davidson

NEW YORK — The Indian steel scrap market appears to be divided, with larger producers marking a gradual return and smaller producers still waiting on the sidelines.

In recent trade, the country’s imports of shredded scrap were reported in a range of $365 to $370 per tonne c.f.r. Nhava Sheva, but market participants were quick to note that only a handful of large producers traded at that level.

For the rest of the market, bids for shredded scrap were reported in a range of $350 to $355 per tonne, while offers from the United States, the United Kingdom and continental Europe reportedly increased following the sales to large producers. Offers were mostly reported in a range of $365 to $375 per tonne, although one trader said offers from Europe have trekked as high as $385 to $390 per tonne.

This apparent divide between Indian mills that can afford to import scrap at current global trade levels and those that can’t due to weak business conditions has resulted in split opinions on the near-term direction of the Indian market.

"(The) market is sluggish and we don’t see much demand coming in the next two months regardless of the currency going either way," one exporter said.

"The situation is still very dull in India and most buyers are operating at a third of their capacity, hence their requirement of scrap is down substantially," a second exporter said.

"(Current offer) prices are unworkable for most of the factories and there are no buyers above $350 to $355 levels for shredded, except for a few big factories who bought last at $368 to $370 levels. I guess the buying will be slow for another month at least and then the situation should improve a bit. However, I do not think factories will be operating at full capacity until the beginning of next year," he added.

Most of the scrap sold into India has originated from the Middle East and Africa, and no sales were confirmed out of Europe and the United States, sources said.

For the few suppliers that were able to sell to large producers, the market looks more promising.

"Indian mills seem to be coming back into the market. Finally!" one trader said. "With the rupee somewhat ‘stable’ at levels of 62 to 63 (to the U.S. dollar) we are seeing mills in Chennai and Nhava Sheva buying shred at levels of $370 c.f.r. basis. ... Hopefully we have turned the corner and the last few months of the year will be good in terms of steel and scrap demand."

Apart from some producers accepting the new base levels of the Indian rupee against the dollar, the construction industry has gained momentum with the end of the monsoon season, another trader said. Getting business done is a bit hard due to stiff competition, but momentum is picking up, he added.

"We are also getting some good demand from Chennai-based buyers for shred and are currently concentrating (on them)," he said.

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