India lockdown rattles ferrous scrap market; cancellations seen: sources

Singapore — India's announcement late Tuesday of a 21-day lockdown effective Wednesday rattled the ferrous scrap market as cancellations of shipments were heard coming to action, sources told S&P Global Platts.

Some East Asian scrap suppliers who were looking to India as a brighter spot amid recently subdued Southeast Asian demand, were heard scrambling to cancel loadings since Monday, with getting wind of a possible lockdown prior to the announcement.

"We ceased all container loadings immediately yesterday [Monday]," a Hong Kong-based trader told S&P Global Platts. "Suppliers and traders are afraid that we would not receive payment after loading due to the lockdown."

The buy side were also heard to have stopped shipments due to mills shuttering and complications caused by the lockdown.

"The situation is critical; the buy side is refusing to receive shipments now and the cargoes are stuck at ports," an India-based trader said. "Nothing will be operational."

As the coronavirus spreads in India, traders said domestic induction furnaces had already shuttered as they can switch off at shorter notice than blast furnaces.

"The lockdown was imposed by the government, but mills are shutting down on their own accord," a Singapore-based India trader said. "India doesn't have the infrastructure to handle this epidemic if it spreads, hence the lockdown is essential to curb it."

Regional Asian prices of scrap, already battered by lackluster steel demand, may come under further pressure during the 21-day lockdown in India, as the country is the largest importer inside Asia, sources said.

India was Asia's largest ferrous scrap importer in 2019, overtaking South Korea, taking 7.05 million mt of scrap, up 11% from the previous year.

"It's a bloodbath. Almost all manufacturing activities might come to a halt," another India-based trader said. "Bangladesh and Pakistan might be the next to follow."