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Indian steel mills see shredded scrap impasse

Keywords: Tags  scrap, ferrous, steel, India, export, import, shred, heavy melt HMS

NEW YORK — Indian steel mill imports of shredded scrap came to a standstill this past week following a huge divide in bid and offer prices.

Exporters and importers said the situation is likely to continue for at least another week, with buyers seemingly uninterested in chasing scrap amid a weak product environment.

A softening Indian rupee and a seasonal drop in steel production rates and finished product demand has sent Indian domestic steel prices down, leading Indian buyers to bid between $380 and $390 per tonne c.f.r. Nhava Sheva for shredded scrap imports, market participants said.

Meanwhile, U.S. and European exporters refused to lower offer prices from a range of $400 to $405 per tonne, citing strong scrap prices in their domestic markets.

"U.S. domestic prices seem to have improved and the U.K. and Europe do not want to sell aggressively. They are expecting prices to move up, so (they) are offering shred at around $405 per tonne," one Mumbai-based trader said.

A second trader said the gap between bid and offer prices meant that little or no shred was booked this past week by Indian importers. A third trader said it was a similar story for other grades, such as heavy melt steel scrap, which sources said was trending in a range of $365 to $370 per tonne c.f.r. Nhava Sheva for an 80/20 mix of No. 1 and No. 2 heavy melt.

"The Indian market remains quiet—not much activity happening. Shred offers are around $400 per tonne c.f.r. Nhava Sheva, but most Indian mills can only afford to pay $385 to $390 per tonne," another Mumbai-based trader said. "Domestic finished steel prices have all come down. (There is) not much positivity in the market at the moment."

One exporter said that a bulk cargo booked from a U.S. West Coast exporter May 28 had arrived in Kandla this past week, further dampening any supplier hopes of better scrap prices. The port of Kandla in Gujarat is near the main import hub of Nhava Sheva and Mumbai, and movements in either port impact both regions, market participants said.

"One vessel has arrived at Kandla with 43,000 tonnes of scrap imported by a trader. The cargo has 19,000 tonnes of shred and 19,000 tonnes of heavy melt. The balance is plate and structural steel scrap," he said.

The cargo was booked at an average price of $405 per tonne, AMM understands.

"The market here remains subdued, with monsoons in full force in most of the country. This has a dampening effect on construction demand. I do not expect prices to improve until (the end of) September," the exporter said.

"Indian markets still remain dull and most buyers are inactive. I guess it will take a couple of weeks more before they return to buying," a second exporter said.

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