India: Ferrous scrap prices dip by INR 300/t w-o-w in Chennai - 2 Jul

• Scrap prices dip despite recovery in billet prices
  
  
• Imported scrap remains unviable amid cautious sentiment
  
  

According to BigMints latest assessment, HMS (80:20) scrap prices in Chennai declined by INR 200/t d-o-d to INR 31,000/t, registering a weekly decrease of INR 300/t. In the semi-finished segment, billet prices remained stable d-o-d at INR 42,000/t, but recorded a weekly increase of INR 800/t. Meanwhile, in the finished steel segment, rebar prices remained unchanged d-o-d at INR 45,800/t, while edging up by INR 100/t on a weekly basis, indicating a marginal recovery in market sentiment.

Imported and domestic price trends

According to market participants, Australia-origin shredded scrap was offered at $370-375/t CFR Chennai, while HMS (80:20) was quoted at $340-345/t CFR. Buyers continued to place bids $10-15/t below prevailing offers, indicating subdued buying sentiment. Meanwhile, domestic scrap remained more competitively priced than imported material, restricting fresh import bookings.

In the domestic market, HMS (80:20) scrap prices were quoted at INR 30,500-31,000/t for cash transactions, while extended credit deals were settled at INR 31,000-31,500/t. Overall, market activity remained largely within the INR 30,500-31,500/t band, with transaction prices varying based on payment terms and individual mill volume requirements.

Buyer-supplier sentiments

A mill representative stated that finished steel demand remains weak, keeping overall market activity subdued. Billet prices have firmed, as sellers are withholding material rather than selling below production costs and incurring conversion losses. While rebar prices have remained largely unchanged, finished steel inventories at mills have increased to around 25-30 days.

With inventories at elevated levels, producers are focusing on reducing stock and operating at relatively lower capacity utilisation. Consequently, scrap procurement continues to be carried out on a need-based basis, reflecting cautious buying sentiment.

A scrap supplier stated that HMS (80:20) prices are currently ranging between INR 30,500-31,500/t, with transaction levels varying based on payment terms and mill-specific requirements. Market sentiment continues to remain subdued, prompting mills to procure scrap only for immediate production requirements. Participants further noted that adequate domestic scrap availability, coupled with weak finished steel demand, has reduced procurement urgency and limited any upward movement in scrap prices.

Outlook

The near-term outlook for Chennai scrap remains cautious, with mills expected to continue need-based procurement amid weak finished steel demand and comfortable domestic scrap availability. Imported scrap is likely to remain unattractive at current offer levels, restricting fresh bookings. Prices are expected to fluctuate within INR +/- 200-500/t.