NEW YORK U.S. export sales of containerized ferrous scrap to India remain virtually nonexistent despite a modest recovery this past week in Indian currency values.
Strong U.S. market prices have created a large gap between export offers and bids from Indian mills struggling to secure demand for finished product, market players said.
U.S. offers for shredded scrap reportedly range from $395 to $400 per tonne c.f.r. Nhava Sheva, while Indian mills bid $380 to $385.
"The Indian rupee has appreciated to some extentaround 62 to a dollar from 68 a month ago. However, rebar prices and demand are yet to improve. Mills are still trying to buy cheaper input materials from local (suppliers), the United Arab Emirates (UAE) or African countries," one exporter said.
Rebar prices in India have remained unchanged for nearly four months, another source said, suggesting that it will be some time before scrap-based steel mills in India buy shredded or heavy melt from the United States, the United Kingdom or continental Europe. "Shredded scrap has become a luxury for Indian secondary steel mills," he said.
Any optimism in the Indian steel market seems to have fizzled, one trader in Mumbai, India, said. "Imports are down to a trickle, with almost all mills having slashed production and relying on local raw materials."
Most market participants said there have been no U.S., U.K. or European sales to India, with the only reported transactions originating from the UAE or Africa.
Sources said heavy melt from some Middle East and African countries sold this past week at $355 to $365 per tonne, depending on quality.
"(The) Middle East scrap export market is overly dependent on Indian buyers. And since mills cant afford to pay higher numbers, heavy melt prices from the Middle East have not increased as much as shredded from other parts of the world," the Mumbai trader said.
But there could be some light at the end of the tunnel for U.S., U.K. and European exporters in the near term, a few exporters said.
"In the past two to three days, Indian markets domestically for (raw material) have shot up by about $16 per tonne. We expect momentum to gather pace in the coming months," said a source at a global scrap exporter to India. Many midsized Indian mills arent keen to buy shredded from the West, "as the quality has deteriorated at processors in the U.K. and Europe due to stifling competition."
A second Mumbai-based trader said market sentiment has improved in India. "Prices of finished products have started improving a bit, but the gap between international markets and Indian markets is about $30. However, scrap from the U.S., U.K. and Europe is still unviable, as Indian mills are still operating on an average of 50-percent capacity," he said.
Indian mills will seek local supply of sponge iron, scrap, pig iron and the like in the near term, participants said.
"Only some feedstock buying is happening for bigger users, and a lot of domestic cheaper scrap is available at competitive prices compared to imported scrap," a third trader in India said. "Over and above this, finished steel is moving out too slow, creating a Catch-22 situation for the (steel)makers while the cost of power, labor and manufacturing is all going up."