India: Ferrous scrap prices in Chennai dip by INR 100/t w-o-w - 7 May

• Tight scrap supply offsets weak steel sentiment
  
  
• Billet prices decrease by INR 500/t w-o-w
  
  

According to BigMints latest assessment, HMS (80:20) scrap prices in Chennai declined by INR 100/t w-o-w to INR 35,800/t, while remaining stable d-o-d. In the semi-finished segment, billet prices dropped by INR 300/t d-o-d to INR 44,500/t, with a weekly decline of INR 500/t, reflecting weaker market sentiment.

Similarly, in the finished steel segment, rebar prices fell by INR 300/t to INR 51,200/t both d-o-d and w-o-w basis. The overall trend indicates subdued demand in the steel market, which continues to exert pressure on both semi-finished and finished steel prices.

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 $370-375/t CFR. Despite the ongoing shortage of scrap in the domestic market, buying interest for imported material remained limited.

Market sources indicated that higher dollar rates have increased the landed cost of imported scrap, making domestic scrap offers comparatively more cost-effective for buyers. As a result, mills are showing limited interest in fresh import bookings and are continuing to rely largely on domestic procurement to meet near-term requirements.

In the domestic market, HMS (80:20) scrap prices were quoted at INR 35,500-36,000/t for spot deals with immediate payment. Meanwhile, transactions on extended credit terms were concluded at higher levels of INR 36,000-36,500/t. Overall, trading activity remained largely concentrated within the INR 35,500-36,500/t range, with price variations mainly influenced by payment terms and mill-specific volume requirements. The market continued to witness need-based procurement, while buyers remained cautious amid fluctuating steel demand.

Buyer-supplier sentiments

A market participant highlighted that continuous declines in sponge iron prices in neighbouring markets have increased pressure on local merchant sellers to revise their offers downward. Simultaneously, weak demand for billet and rebar has created selling pressure on mills, affecting overall steel market sentiment.

At present, mills are carrying approximately 15-20 days of rebar inventory, reflecting subdued demand conditions. Moreover, despite the declaration of the state assembly election results, the process of forming the new government is still underway. As a result, several government projects are yet to resume full-scale operations, which has slowed construction-related steel consumption. The combined impact of weak demand and high inventories continues to weigh on the market.

A scrap supplier indicated that HMS (80:20) prices are currently hovering in the range of INR 35,500-36,500/t, with variations depending on payment terms and mill-specific requirements. The continued decline in semi-finished and finished steel prices has also exerted pressure on scrap prices.

However, despite weaker steel sentiment, tight scrap availability is preventing mills from sharply reducing their procurement prices. Additionally, lower imported scrap arrivals due to higher offer levels have further tightened supply in the domestic market. The combined impact of restricted imports and limited domestic availability continues to support scrap prices despite pressure from the steel segment.

Regional comparison

In the western India-based Jalna market, billet prices declined by INR 400/t to INR 43,400/t. Meanwhile, rebar prices fell by INR 200/t to INR 48,500/t, while HMS (80:20) scrap prices were unchanged at INR 34,100/t.

Market participants noted that rebar demand has weakened over the past couple of weeks, resulting in price corrections in the finished steel segment. Despite softer steel demand, a mild shortage of scrap continues to persist in the market, encouraging mills to increase sponge iron usage 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, as weak billet and rebar demand continues to pressure market sentiment. However, tight scrap availability and lower imported scrap arrivals are likely to limit any sharp downside. Mills are expected to continue need-based procurement. Price movements are expected to remain restricted within INR +/- 200-500/t.