India: Ferrous scrap prices rise by INR 500/t w-o-w in Chennai as supply tightens - 16 Apr

• Tight supply lifts scrap despite softer steel prices
  
  
• Rebar prices decrease by INR 700/t w-o-w
  
  

According to BigMints latest assessment, HMS (80:20) scrap prices in Chennai increased by INR 200/t d-o-d to INR 36,500/t, marking a weekly gain of INR 500/t. In contrast, billet prices declined by INR 900/t w-o-w to INR 47,100/t, while remaining stable on a daily basis.

Meanwhile, rebar prices fell by INR 700/t w-o-w to INR 52,500/t, with a further decline of INR 200/t d-o-d. The divergence indicates firmness in scrap prices amid supply constraints, while weakness in finished steel reflects softer demand and cautious buying sentiment in the market.

Imported and domestic price trends

Market participants reported that Australia-origin shredded scrap was offered at $395-400/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.

Despite the ongoing scrap shortage in the domestic market, buying interest for imported material remained limited. Buyers are cautious amid expectations of a potential correction in steel prices, which may reduce realisations by the time the cargoes arrive. As a result, mills are hesitant to book at current elevated levels, anticipating higher landed costs relative to future market conditions.

In the domestic market, HMS (80:20) scrap prices were quoted at INR 36,500-37,000/t for spot deals with immediate payment. Transactions on extended credit terms were concluded at higher levels of INR 37,000-37,500/t. Overall, market activity remained largely concentrated within the INR 36,500-37,500/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 said that sponge iron prices have softened slightly, as lower-priced material from neighbouring states has exerted pressure on local offers. Despite a w-o-w decline in billet prices, demand remains healthy, supported by steady procurement from rolling mills.

In the rebar segment, retail demand has slowed due to cautious buying sentiment and price sensitivity. However, demand from project and infrastructure segments remains stable, providing partial support to overall offtake. Rebar inventory levels at major mills are estimated at around 10-15 days, indicating balanced supply conditions despite mixed demand trends.

A scrap supplier indicated that HMS (80:20) prices are currently hovering in the range of INR 36,500-37,500/t, with variations depending on payment terms and mill-specific volume requirements. The ongoing commercial gas shortage continues to disrupt scrap cutting and processing activities, restricting effective supply.

Additionally, lower arrivals and reduced bookings of imported scrap have further tightened availability in the market. The combined impact of processing constraints and limited imports is creating supply-side pressure, which is supporting firm domestic scrap prices.

Regional comparison

In the western India-based Jalna market, rebar and HMS (80:20) scrap prices remained stable at INR 53,000/t and INR 34,000/t, respectively, while billet prices declined by INR 300/t to INR 45,000/t.

Market participants said that trading activity in finished steel has slowed over the past few days, resulting in softer demand. Meanwhile, scrap availability at mills remains adequate, with supply aligned to current requirements. This balanced supply situation, coupled with weaker downstream demand, is prompting expectations of a potential correction in scrap prices in the near term.

Outlook

The Chennai scrap market is expected to remain firm in the near term, supported by tight domestic availability and gas-related processing constraints. However, import booking activity may stay limited due to cautious buyer sentiment. Despite supply tightness, prices may witness a mild correction following recent weakening in steel prices.