Bangladesh: Imported containerised scrap index rise up to $4/t w-o-w; liquidity concerns in domestic market

Imported ferrous scrap offers into Bangladesh increased by $4/t w-o-w for containerised scrap, while buyers in the Dhaka region showed less interest due to liquidity concerns. Bulk offers from the US and Japan were absent, as major players adopted a wait-and-watch approach, seeking better pricing before making procurements. Today, the market remained largely closed due to the observance of Muharram across the country.

As a major steel mill representative, Bangladesh faces significant challenges. Student protests against quotas have led to blocked roads and railways, indirectly disrupting scrap and steel movements. Steel demand remained weak, with only big mills are active, focusing on bulk vessels. The banking sector is in turmoil, stalling business for small mills. In Dhaka, several mills are up for sale, with some owners looking to sell plants along with the land. The industry is witnessing de-growth.

Containerised scrap offers/indicatives

According to market insiders, workable levels for imported ferrous scrap in Bangladesh were at $410/t for Australian HMS (80:20), $420-422/t for UAE HMS 1 & PNS mix, $427-430/t for European shredded, and $420-425/t for US shredded.

Offer levels were slightly higher, with Australian HMS (80:20) at $415/t, UAE HMS1 & PNS mix at $425-428/t, European shredded at $430-432/t, US shredded at $426-428/t, and Singapore PNS at $455-460/t.

According to a buyer source, the market is very slow in the imported segment, with buyers adopting a wait-and-see approach due to higher offers and anticipating a price drop. A gas shortage has caused many rolling mills to shut down or reduce production. While there is a high preference for Australian, Singapore, and Malaysian materials, the hike in freight rates has hindered significant bookings.

As per market insiders, for Dhaka-based mills, competing with Chattogram region mills is increasingly getting challenging. Many small mills are shutting down, a clear example of the economic principle where big capital absorbed small capital.

Recent deals:

• Around 500 t of HMS & PNS mix scrap from the UAE were booked at $415/t CFR Chattogram
  
  
• Approximately 2,000 t of Australia-origin PNS were booked at $445/t CFR Chattogram
  
  
• Around 1,000 t of Chile-origin HMS(80:20) were booked at $412/t CFR Chattogram
  
  
• Approximately 2,000 t of New Zealand-origin shredded scrap were sold at $430/t CFR Chattogram
  
  
• Around 1,600 t of Singapore-origin PNS were sold at $448/t CFR Chattogram.
  
  

Changes in assessment prices:

• BigMint's assessment of Europe-origin containerised shredded was up by $3/t w-o-w to $427/t CFR Chattogram.
  
  
• BigMint's assessment showed Europe-origin HMS (80:20) prices increased by $4/t t0 $406/t CFR Chattogram.
  
  

Domestic market: Domestic rebar prices were dropped amid weak demand across the market due to monsoon related slowdown and stood at BDT 84,000-86,000/t exw Dhaka and BDT 91,000-92,000/t exw Chattogram, with workable levels for billets at BDT 73,000/t and offers at BDT 74,500/t. Plate scrap ship ex Chattogram yard was heard at BDT 73,000-74,000/t exy and HMS scrap at BDT 58,000-59,000/t exy.

Bangladesh's central bank is set to announce its monetary policy for the first half of financial year 2025 (FY25) in the third week of July to combat persistently high inflation, which has exceeded 9% since March last year. Despite previous rate hikes to 8.5% in May 2024, inflation remains stubbornly high above the bank's target of 7.5% for FY24. The government aims to limit consumer price increases to 6.5% in FY25. Despite tightening measures, including recent rate increases, challenges persist as the central bank continues efforts to stabilise the economy amid ongoing inflationary pressures.

Outlook: Market watchers foreseeing a sluggish demand across the market, particularly in the Dhaka region, attributed to hesitant scrap trades amid liquidity concerns and issues related to letters of credit (LCs). The monsoon season is expected to further dampen domestic construction activities, thereby keeping scrap consumption subdued in the near-term.