Indian steel mills pushed on scrap prices

NEW YORK — Low scrap inventories and changes in the currency market have apparently sparked increased interest from steel mills in India, with suppliers pushing for higher prices.

Market participants said Indian import prices for shredded scrap delivered to Nhava Sheva climbed gradually through the past week as offer prices continued to rise.

Sales early in the week were reported in a range of $363 to $368 per tonne c.f.r. Nhava Sheva, while late in the week sales were reported at $370 per tonne. There also were unconfirmed reports of a sale at $375 per tonne after one exporter turned down a bid of $373 per tonne.

Sources said that only large steel producers in India are in the market at these prices, while smaller induction furnace operators are still bidding for shred at $360 per tonne.

U.S. exporters said they were holding off sales until buyers accept their current offers of $380 per tonne for shred.

"We rejected bids below $380 because we feel that prices need to be at that level, given the current strength in the U.S. domestic market. At bids of $370 to $375 per tonne, Indian mills are not getting material, so they will have to be more aggressive," one U.S.-based exporter said. "Mills in India have not bought enough material consistently. Now they need scrap. If they want the quantity they will have to jack up their price. At $380, you will see a lot of exports happening in today’s market."

Other market participants, however, were more skeptical about higher scrap prices to India.

"The Indian market is improving a little on price, but it does not have much to do with demand. Prices increased because of stronger domestic markets in exporting countries. There are still severe problems on the demand side," an India-based importer said.

Other exporters agreed. "Volumes picked up a bit, but not to the extent where it should be. The market is still very quiet, with nil to little demand. We are expecting this slowdown to continue due to festival season and election-year political activities," a second exporter source said.

"Scrap activity is very less, as finished steel prices in India are also correcting. Demand for bars and structural steel is poor; hence, there is no conversion margin for factories at these scrap price levels," another India-based importer said.

With the Indian rupee recovering to 61 to 62 to the U.S. dollar, an exporter in the Middle East said the market has "moved from ICU (intensive care unit) to ‘under observation.’ Only special steel mills or big mills can pay high prices. Induction furnaces are not willing to go above $360 for shred. Bids are way below (current offer prices)."

A Scandinavian exporter said Indian mills have turned their attention to other grades of scrap. "It seems they prefer to buy ‘cheap’ scrap nowadays, like turnings, big pieces of cast iron and light metal scrap," he said.

Sources assessed the market for an 80/20 mix of No. 1 and No. 2 heavy melt scrap at $345 to $350 per tonne c.f.r. Nhava Sheva, with trades reported at both ends of that range.

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