Bangladesh: Imported ferrous scrap index down by up to $8/t w-o-w; cautious buying amid weak steel demand

The imported ferrous scrap index for Bangladesh witnessed downtrend as bulk offers, primarily from Japan and the US, continued to trend downward with limited interest. H2 scrap prices dropped by up to $8/tonne (t) w-o-w, while US-origin HMS (80:20) bulk scrap saw a decrease of $3/t w-o-w.

Assessment prices:

• BigMint's assessment of Europe-origin containerised shredded remained range bound w-o-w at $400/t, while HMS (80:20) prices stood at $390-391/t at a similar level assessed last Wednesday.
  
  
• BigMint's latest weekly assessment indicates that US-origin HMS (80:20) bulk prices have decreased by $3/t, to $378/t CFR Chattogram.
  
  
• BigMint's weekly assessment indicates that Japan-origin H2 bulk prices have decreased by $8/t w-o-w, to $369/t CFR Chattogram
  
  

Market commentary

As per domestic market participants, A major Chattogram-based steel mill remains inactive in the market, holding over 2 lakh tonnes of scrap inventory until November, sourced from earlier bookings at $385-410/t. The mill also has 1-1.5 lakh tonnes of finished steel, which it needs to sell first.

Another Chattogram-based scrap importer said "As of now, the last bulk offers we received from the US were at $380-385/t, but we asked for $375/t, which the supplier declined. Indicative offers from Japan are around $362-366/t post-Kanto, and while some suppliers are willing to offer discounts, we don't have immediate requirements. European containerised shredded is currently at $400-405/t, with HMS priced $20-25/t lower CFR Chattogram. Australia's HMS 1 and mixed material is around $394-398/t, but we expect prices to fall further, given the surrounding market trends."

A market Dhaka-based trader informed, "Australia's prices of HMS (80:20) stand at $400/t but high freight costs made them less suitable for Bangladeshi buyers. And, we have heard recently few distressed cargo containers from Australia recently sold to India after being diverted from Bangladesh due to approval delays".

A representative from major steel mill stated, "Although no major bulk offers were reported from the US West Coast, tradable prices of deep-sea HMS (80:20) have been observed at $380-385/t CFR and major steel mills have paused scrap bookings as they maintain sufficient inventories from previous purchases and buyers in Dhaka were struggling with financing issues which are better now, yet market sees limited bookings."

Around 3,000 t of mixed scrap booked from UK, Malaysia and Australia including shredded, HMS-PNS mix and holo bundle grade scrap were booked at $390-410/t on a CFR Chattogram basis during the last seven days.

Recent bulk offers of US-origin scrap are around $382-385/t for HMS, with an additional $5/t for shredded and another $5/t for bonus grade. Bangladeshi buyers may secure bulk material at $380/t, with expectations that US pricing will stabilise post-elections.

Looking at the previous bulk scrap import trend, August saw a significant increase in bulk scrap imports from the US, with a nearly 58% rise to 198,192 t from July's 125,653 t. Compared to the same period last year, imports were up by 82% from 70,320 t.

Domestic market

Domestic scrap is priced at BDT 51,000-53,000/t, with plate scrap from shipbreaking around BDT 65,000-66,000/t. Rebar offers in Dhaka recently dropped to BDT 82,000-83,000/t, and BDT 87,000-88,000/t for Chattogram-based mills.

Bangladesh's market is experiencing a bid-offer disparity, with minimal buying interest despite stable domestic scrap prices. While letters of credit are opening, demand remains low due to poor sales of rebar.

As per industry reports, Bangladesh Bank Governor assured correspondent banks that all overdue payments related to letters of credit (LCs) will be cleared within the next five to six months. He confirmed that Bangladesh had already settled $800 million in dues to correspondent banks. The central bank is collecting foreign currencies from the interbank market to help state-run banks clear LC payments for priority sectors like power and energy. Governor emphasised that Bangladesh has never defaulted on payments and does not intend to in the future.

Bangladesh's ship recycling market is unstable, impacting the steel industry due to floods and new environmental regulations. Ships arriving in Chattogram must now have an approved Inventory of Hazardous Materials (IHM) certification and undergo ballast weight surveys.

Monsoon rains have disrupted operations leading to overcrowded yards and a shortage of recyclable ships which affect steel supply. While recent stabilisation in the taka and steel prices has sparked some renewed activity, the sector remains cautiously optimistic.

Last week, Chattogram Port received 20,372 LDT indicating a tentative recovery that could benefit steel production.

Outlook

Imported scrap offers in Bangladesh are expected to remain under pressure, with some buying activity anticipated around the end of September as the monsoon season recedes. However, buyer confidence remains weak and is likely to take time to stabilise. According to market insiders, short-term fluctuations in import volumes are likely, though the long-term outlook suggests a slow but stable market, with recovery heavily dependent on consistent political decisions that will affect indirectly the foreign exchange reserve conditions in the country.