Scrap to iron ore ratios have remained weak, following sustained high iron ore demand in China throughout the coronavirus pandemic and record high prices in May.
While scrap import demand in India has recovered from last year, prices of Platts TSI Shredded Scrap CFR Nhava Sheva and 58% Fe iron ore fines see ratios remaining close to the all-time low in October 2020 of 1.82 scrap to iron ore, according to S&P Global Platts analysis July 19.
The ratio moved higher alongside a recovery in scrap prices since the fourth quarter and averaged at 2.05 scrap to iron ore in June. Platts TSI Shredded Scrap CFR Nhava Sheva averaged $517.50/mt in June, and moved up to $530/mt CFR July 16.
The ratio last peaked in February 2020, at 2.9 scrap to iron ore. The ratio uses 58% Fe fines China CFR prices netback to West India, and scrap and iron ore is adjusted to a 100%-Fe basis.
Major scrap importer India relies more on domestic iron ore resources, which help the nation to minimize iron ore imports. India competes for scrap imports with regional buyers such as Pakistan, buying from the Persian Gulf, the US and other markets.
Platts assessment is based on containerized shredded ferrous scrap at the port of Nhava Sheva, near Mumbai, complying with ISRI 211 classification or equivalent, specifying homogeneous and magnetically separated iron and steel scrap originating from automobiles, No.1 and No.2 steel, and miscellaneous baling and sheet scrap, with an average density of 70 lb/square foot.
