Effect of high exchange rates on Ferrous Scrap imports
Ferrous Scrap imports to India slipped 30% M-o-M , according to the information released by the Indian Customs. 510,000 MT of Scrap was imported in the month of July’13 which altogether declined to 357,700 MT in August’13. The sharp decline is accounted for the weak currency which experienced a fall to 68.90/USD on 28 August, 2013.
Scrap import from various countries was affected by varying degrees. The imports from UK were reported to decline by 49% to 60,300 MT; from South Africa, imports were down by 30% to 59,200 MT and US imports fell by 40% to 35,200 MT. The remaining 203,000 MT was received from various other countries. Chennai recorded the highest amount of imported Scrap of about 92,000 MT. Maximum import of approx 33,300 MT was from Europe.
The offers for August’13 coming from Dubai HMS 1&2 were found to be in a range of USD 330-335/MT vs USD 340–345/MT in July, CFR Mumbai. Shredded Scrap from UK and Europe were quoted at USD 370-375/MT vs USD 370/MT for the last week of July, CFR Mumbai. Although, the offers were similar to that in the previous month but the orders from India remained limited due to high exchange rates.
Looking at the import scenario and the shortage of ferrous scrap in the country, it is clearly visible that the importers at the moment are reluctant to trade with the uncertainty existing in the market. After a record breaking dip, the rupee is slowly recovering and it showed stable price movements well within the range of 64.35-65.12 as spotted on 10 Sep, 2013. But for the economic import of Scrap, rupee value still needs moderation. Importers are counting on a speedy recovery of the rupee and the market conditions to stabilize for viable imports.