Bangladesh: Containerised ferrous scrap prices rise; escalating freight rates keep buyers cautious

• Buyers looking to source scrap from alternative origins
  
  
• Major steel mills to boost rebar output in coming months
  
  

In Bangladesh, prices of containerized ferrous scrap have surged in recent weeks driven by escalating freight rates from East Asian origins like Indonesia, Malaysia, Hong Kong, and Singapore. Consequently, buyers are increasingly looking at alternative sources such as Australia and New Zealand, opting for safer and more stable supply channels.

Bangladeshi buyers are increasingly favouring nearby origins such as Australia for ferrous scrap imports, with prices ranging from $250 to $500 /t. Offers from Japan and Hong Kong are now deemed unviable due to a significant increase in freight rates.

As per market insiders, just two months ago, freight rates from Hong Kong stood at $700 for a 20-foot container, but have since surged to $1,500-$1,950. In the current market, Australian shredded scrap is being offered at $430/t, with reported buying activity at $427-428/t. HMS (90:10) is priced between $415-418/t, while HMS (80:20) is quoted at $405-$406/t.

According to a major trader source, "Freight rates for container shipments have surged by 1.5 times in Bangladesh and India, with notable impact on trade dynamics. Previously at $350, freight rates from Malaysia to Bangladesh have soared to $850, while rates from Malaysia to India have risen from $920 to approximately $1,100. This significant increase is attributed to port congestion in Malaysia. Consequently, trades are expected to be affected, especially in Bangladesh where low demand coupled with higher offers may deter buyers. Even previously unviable offers from Europe are further challenged by these escalating freight costs."

Change in assessment price:

• BigMint's assessment of Europe-origin containerised shredded increased by $4/t w-o-w to $424/t, while HMS (80:20) prices stood at $405/t (increased by $2/t w-o-w).
  
  
• BigMint's latest weekly assessment shows US-origin HMS (80:20) bulk prices were stable at $402/t CFR Chattogram.
  
  
• BigMint's weekly assessment for Japan-origin H2 bulk price is unchanged w-o-w at $398/t CFR Chattogram.
  
  

Japanese H2 offers were in the $398-400/t range, while buyer inquiries hovered at around $390-392/t CFR.

Recent deals:

• Around 700 t of Chile-origin HMS (90:10) were sold at $405/t CFR Chattogram.
  
  
• Around 1000 t of Hong Kong-origin PNS was sold at $450/t on a CFR Chattogram basis.
  
  
• Approximately 1000 t of UAE-origin HMS mix PNS were booked at $415/t CFR Chattogram.
  
  
• A parcel of 2000 t of HMS (90:10) from Chile sold at $408/t CFR Chattogram.
  
  
• Around 2000 t of HMS (90:10) of Chile origin at $408/t CFR Chattogram.
  
  
• Approximately 1000 t of Hong Kong-origin PNS was booked at $448/t CFR Chattogram.
  
  

Domestic market:

In the domestic rebar market in Dhaka, rebar is priced at BDT 89,000/t ($758/t), while billets are at BDT 76,500-77,000/t (equivalent to $651-656) exw. Ship-breaking scrap prices locally are between BDT 62,000-63,000/t (equivalent to $528-536/t).

Abul Khair to boost rebar output: As per sources, AKS, a major steel mill based in Chattogram, Bangladesh, is gearing up to ramp up its rebar production with the inauguration of a new 1.6 mnt per year mill in July 2024. This expansion will elevate total rebar output to 2.8 mnt per year, with plans for an additional 1.2 mnt/year bar and rod mill in the future. Bangladesh's leading steel producer, BSRM, is also expanding its operations with a new 600,000 t/year rebar mill in Chattogram which is set to commence production in July-August this year.

The new Customs Act 2023 takes effect on 6 June, increasing from 223 to 269 sections. It aligns with international standards, introducing measures like Authorized Economic Operators and Electronic Declarations. Passengers providing false information face fines of BDT 50,000 to BDT 1 lakh, with goods confiscated. Section 254 allows rewards for reporting duty evasion. Section 193 mandates police to send seized goods to customs warehouses, with penalties for negligence. Failure to declare goods accurately upon arrival can incur fines of BDT 50,000 to BDT 1 lakh under Section 154. Import duties must be paid within 10 days, with penalties for delays. Importers are accountable for declaration accuracy under Sections 82 and 84, with fines ranging from BDT 5,000 to BDT 2 lakh.

Outlook: During the monsoon period, there might be a temporary dip in demand in the construction sector due to slow project progress. Nevertheless, long-term prospects are optimistic, with expected annual demand growth from end users.