Domestic ferrous scrap prices fell across India as trade dropped in response to weaker automotive demand.
The daily Davis Index for HMS 1&2 (80:20) declined by Rs600/mt ($8.40/mt) to Rs21,950/mt del Mandi Gobindgarh, as buyers refrained from buying ferrous scrap in a hope that prices will fall further. The daily index for sponge iron settled at Rs22,350/mt declined by Rs325/mt.
Steel demand from the automotive sector has dropped after car makers reliant on parts and components from China were forced to freeze production lines. In an effort to contain the spread of the Coronavirus in China, the country shutdown all manufacturing in several of its regions. Supply of parts to Indian car makers has ground to a halt as a result.
Market participants are bearish on longer terms trends in the steel industry as tight lending concerns were not alleviated in the fiscal 2020-2021 budget rolled out on Feb 1. India’s finance minister stayed silent on infusing new capital into state-run banks which means the market will continue to face liquidity issues.
The daily Davis Index for HMS 1&2 (80:20) declined by Rs275/mt to Rs23,100/mt del Mumbai and the daily index for sponge iron declined by Rs200/mt to Rs20,350 del Mumbai.
The union budget proposed $23.7bn in spending for transport and infrastructure which failed to boost industry sentiment or cause any impact on ferrous scrap or steel prices.
Price outlook for the next few weeks is mixed in India as markets wait for clearer cues from China, which returns from annual holidays in a week.
($1= Rs71.40)