India: Chennai scrap slips INR 500/t w-o-w amid election-led slowdown - 24 April

• Scrap slips as weak steel demand drags sentiment
  
  
• Billet prices decreased by INR 1,200/t w-o-w
  
  

According to BigMints latest assessment, HMS (80:20) scrap prices declined by INR 500/t w-o-w to INR 36,000/t, while remaining stable on a daily basis. In the semi-finished segment, billet prices held steady d-o-d at INR 45,500/t, but registered a sharp weekly decline of INR 1,200/t, reflecting softer market sentiment.

Similarly, in the finished steel segment, rebar prices dropped by INR 800/t w-o-w to INR 51,700/t, while remaining unchanged d-o-d. The overall trend indicates weakening demand in downstream steel markets, which has exerted pressure on prices, even as short-term stability is observed in daily trading.

Imported and domestic price trends

Market participants reported that Australia-origin shredded scrap was offered at $390-395/t CFR Chennai, while HMS (80:20) was quoted at $375-380/t CFR. However, buyers were bidding $5-10/t lower than prevailing offer levels, indicating cautious sentiment.

Despite this, some deals were concluded in the market, including 500 t of UK-origin MS turnings at $340-345/t CFR Chennai and another 500 t cargo of HMS (60:40) at $350/t CFR Chennai. The transactions reflect selective buying interest at relatively lower price points, while higher offers continue to face resistance.

In the domestic market, HMS (80:20) scrap prices were quoted at INR 35,500-36,000/t for spot deals with immediate payment. Transactions on extended credit terms were concluded at higher levels of INR 36,000-36,800/t. Overall, market activity remained largely concentrated within the INR 35,500-36,800/t range, with price variations driven by payment terms and mill-specific requirements. The trend reflects stable market conditions, with steady trading and balanced supply-demand dynamics.

Buyer-supplier sentiments

A mill representative noted that sponge iron prices have softened slightly, as lower-priced material from neighbouring states continues to pressure local offers. Additionally, trading activity in billet and rebar slowed due to the state assembly elections on 23 April, leading to cautious buying sentiment in the market.

As a result, steel prices have witnessed a sharp correction in recent days, reflecting weak demand and reduced market participation. The slowdown in trading activity has weighed on both semi-finished and finished steel segments. Current rebar inventory levels at mills are estimated at around 12-18 days, indicating adequate stock availability.

A scrap supplier indicated that HMS (80:20) prices are currently hovering in the range of INR 35,500-36,800/t, with variations depending on payment terms and mill-specific volume requirements. The ongoing commercial gas shortage continues to disrupt scrap cutting and processing, limiting effective supply in the market.

Although imported scrap bookings have resumed, the material will take time to arrive, meaning near-term supply tightness is likely to persist. However, with billet and rebar prices declining due to weak demand, scrap prices may also witness some downward correction in the coming days despite the prevailing supply constraints.

Regional comparison

In the western India based Jalna market, rebar prices declined by INR 400/t to INR 51,600/t, while billet prices fell by INR 200/t to INR 44,000/t. Meanwhile, HMS (80:20) scrap prices remained stable at INR 33,400/t.

Market participants noted that trading activity in finished steel has slowed in recent days, leading to softer demand sentiment. Despite this, a mild shortage of scrap continues to persist, prompting mills to increase the use of sponge iron to around 30-40% in their charge mix. This shift is helping mills manage raw material requirements amid constrained scrap availability.

Outlook

Chennai scrap prices are expected to remain range-bound with a slight downward bias, as weak demand in billet and rebar continues to weigh on sentiment. However, persistent scrap shortages and gas-related processing constraints may limit any sharp decline. Mills are likely to follow need-based procurement in the near term.