India: Ferrous scrap prices in Chennai inch up by INR 100/t w-o-w tracking steel market rebound

• Semi-finished steel prices rise INR 1,500/t w-o-w
  
  
• Improved trade in steel may drive scrap offers upward
  
  

According to BigMint's latest assessment, HMS (80:20) scrap prices in Chennai increased by INR 100/t w-o-w to INR 30,300/t, while remaining stable d-o-d. Billet prices were stable d-o-d, but saw an increase of INR 1,500/t w-o-w, now assessed at INR 44,500/t. Rebar prices also increased by INR 1,200/t w-o-w to INR 48,000/t, with a d-o-d rise of INR 200/t. The recent improvement in trade activity for semi-finished and finished steel indicated a positive shift in the market.

Imported and domestic price trends

According to a scrap trader, Australian shredded scrap offers are currently at $380/t, but buyers are placing bids at $373-374/t, with limited interest from mills. Malaysian HMS was offered at $355/t, but bids are at around $340-345/t, which is not viable due to the tight freight component. The higher freight charges from Australia are making suppliers less eager to engage with Indian buyers, resulting in a cautious market outlook.

Domestic prices of HMS (80:20) scrap are currently at INR 30,000-30,500/t for buyers settling deals with immediate payment. For transactions involving extended credit terms, prices increased to INR 30,500-31,000/t. Most offers are concentrated within the INR 30,000-31,000/t range, with the majority of deals being concluded at these levels, signalling stability in the market.

Buyer-supplier sentiments

A mill official highlighted that the rebar market continues to show strong demand, with mills reporting no selling pressure. Standalone re-rollers are actively securing billets in response to the favourable rebar market conditions. Meanwhile, pellet-based sponge iron offers are being quoted at around INR 27,000-27,500/t DAP in Chennai, suggesting stable demand in the region.

Another mill representative shared with BigMint that billet demand in the merchant market is currently strong, with a shortage of billets driving offers upward. While some mills have substantial quantities of imported scrap in the pipeline, they are not actively pursuing current offers for imported scrap, as they are well-supplied for the near term.

A scrap supplier reported that the price range for HMS 80:20 scrap is currently between INR 30,000-31,000/t, depending on payment terms. The growing trade activity in finished steel has positively impacted prices of semi-finished and finished steel, which could lead to a potential increase in scrap prices in the near future as demand for raw materials strengthens.

Regional comparison

In the Jalna market of western India, billet and rebar prices have remained stable, with billets priced at INR 43,100/t and rebars at INR 49,500/t. On the other hand, HMS 80:20 prices saw a d-o-d increase of INR 100/t, now settling at INR 32,800/t. Additionally, there has been a noticeable uptick in trade activity, particularly in the semi-finished and finished steel sectors, signalling improving market dynamics.

Outlook

Market participants are optimistic about the steel market's trajectory in the coming days, driven by strong trade inquiries for finished steel. The surge in demand is expected to support positive movements in the steel sector. On the other hand, scrap prices are likely to remain stable in the near term, with expected fluctuations of INR +/- 500/t.