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Bangladesh: Imported ferrous scrap index fall by up to $4/t w-o-w; nominal trades amid LC constraints

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Melting Scrap

BigMint Bureau

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4 Sep 2024, 20:09 IST

Bangladesh: Imported ferrous scrap index fall by up to $4/t w-o-w; nominal trades amid LC constraints

The imported ferrous scrap index for Bangladesh witnessed a w-o-w decline, primarily driven by the drop in bulk scrap offers with reduced interest in purchasing, due to weak steel demand and a slowdown in construction activities during the monsoon season.

Assessment prices:

BigMint's assessment of Europe-origin containerised shredded remained largely stable w-o-w at $400/tonne (t), while HMS (80:20) prices stood at $390/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 $2/t, reaching $390/t CFR Chattogram.

BigMint's weekly assessment indicates that Japan-origin H2 bulk prices have decreased by $4/t w-o-w, now standing at $387/t CFR Chattogram.

Market survey commentary

A Dhaka-based steelmaker said, "An offer from the UAE for HMS (90:10) is currently heard at $395/t CFR, but our interest is more aligned at the $380-385/t level. The market is sluggish due to flooding, ongoing delays in Letters of Credit (LCs), and financial verification issues. Bulk offers from the US are around $395-400/t, while Australian-origin bulk scrap is priced at $405-410/t CFR. However, material from the Far East remains unviable for us at this time."

A US-based supplier said, "Offers for US-origin HMS bulk are currently at $395-397/t CFR Chattogram, with buyer interest hovering around $385-388/t. The situation in the US is uncertain due to tight domestic generation and ongoing mill maintenance, making it difficult to predict whether bulk scrap prices will move up or down. Japanese offers are hovering in the market at $390-394/t, but trades seem unlikely. UK-origin shredded isn't being offered at the moment; the last heard level was $404-405/t, but buyers have shown little interest at those prices."

A Chattogram-based buyer commented, "US bulk HMS (70:30) is offered at $380/t, with our bid at $370/t. A counter bid from the seller at $376/t remains under negotiation. Meanwhile, Japan's H2 is offered at $385-388/t, with bids at $370-372/t."

A major trading house representative mentioned that Bangladeshi steelmakers are currently silent on bulk inquiries. At the moment, bulk offers from the US are around $400-405/t for shredded and $395-400/t for HMS, but there has been little to no engagement from buyers in Bangladesh. "Recently, we purchased 2,000 t of New Zealand shredded at $405/t CFR Chattogram, and 1,000 t each of Australia and Brazil HMS at $385/t CFR Chattogram," he added.

Another steel mill representative from Chattogram said, "The steel market is currently down and progressing slowly due to the new government formation, stricter bank rules for LCs, and widespread flooding, all of which have significantly reduced consumption. Recently, we secured 500 t of Chilean HMS 1 at $370/t, with similar offers from the Dominican Republic also available at $370/t."

Domestic market overview

Domestic scrap is priced at BDT 56,000-58,000/t, with plate scrap from shipbreaking around BDT 71,000-72,000/t. Rebar offers in Dhaka recently dropped to BDT 84,000-85,000/t, but there has been minimal activity in the long products market over the past few days.

As per market insiders, the local market is also in decline, with many operations shutting down and most running at only 50-60% capacity. Local HMS is priced at BDT 52,000-55,000/t, ship re-rollable scrap at BDT 71,000-72,000/t, rebar at BDT 80,000-84,000/t ex-Dhaka, and BDT 86,000-90,000/t ex-Chattogram, while billet is around BDT 69,000/t.

A trader source informed BigMint that rebar sales were impacted by the ongoing floods. Like many others, we've adopted production cuts and are currently operating at 60% capacity. Local scrap is priced at BDT 53,000-55,000/t, with rebar at BDT 88,000-90,000/t ex-Chattogram and BDT 80,000-84,000/t ex-Dhaka.

The IMF assured Bangladesh of increased budgetary support to aid its economic recovery from political upheaval. IMF Mission Chief Chris Papageorgiou confirmed this during a virtual meeting with Finance and Commerce Adviser Dr. Salehuddin Ahmed. Central Bank Governor Dr. Ahsan H. Mansur revealed ongoing talks for an additional $3 billion loan, given the recent political instability. The IMF will review Bangladesh's reform progress in early October. Previously, the IMF extended a $4.7 billion loan in January to address economic challenges exacerbated by the Ukraine conflict.

Outlook: Imported scrap offers in Bangladesh are likely to remain within a narrow range, with minimal prospects for improvement in the steel market. Interest in Japan-origin scrap is expected to stay subdued, while offers from the UK and US may remain limited due to bid-offer mismatches. However, the recent decline in domestic rebar prices could stimulate some sales, primarily fuelled by selective demand from construction and household projects.