Bangladesh: Imported ferrous scrap market active in bulk bookings; offers rise w-o-w

The imported ferrous scrap market in Bangladesh had a relatively positive week, marked by moderate trade activity, particularly in the bulk scrap segment. Consequently, prices saw a slight increase w-o-w. SteelMint's assessment for UK-origin shredded scrap stood at $428/t CFR Chattogram, up by $3/t w-o-w.

In the recent Kanto tender, major Bangladeshi mills actively participated, with the highest bid placed for Japanese materials. The steel mills secured 15,000 tonnes (t) of H2-grade bulk cargo, maintaining their consistent procurement pattern. Notably, last month, the country booked over 15 bulk cargoes, including 7-8 cargoes from Japan, ranging between $410-440/t CFR for high-grade material.

However, issues related to opening LCs (Letters of Credit) for scrap imports have caused challenges. Buyers are facing limitations, leading to delays in opening LCs. Sellers are adjusting their offers due to these LC issues. Even well-established manufacturers are experiencing difficulties in processing all LCs within the expected timeframe as per market sources.

A tentative booking for a bulk vessel carrying 32,000 t of HMS (80:20) from Australia to Bangladesh was made at a price range of $382-386/t, though confirmation is pending. Containerised scrap offers include UAE HMS (80:20) at $410 CFR Chattogram, and HMS (90:10) offers at $425/t. Bids for the latter are slightly lower, at $415/t CFR.

Recent transactions include the booking of around 3,000 t of South American HMS (80:20) at $410/t, as well as Hong Kong-origin PNS (1,000 t) at $435/t CFR Chattogram.

Offers and indicatives

• Offers for US-origin bulk scrap heard at $405/t CFR.
  
  
• Indicatives for Japanese-origin bulk H2 are around $407-410/t CFR.
  
  

Domestic market updates:

The domestic scrap market in Bangladesh is progressing slowly due to weakened demand. This has led to downward corrections in rebar offers for both Chattogram and Dhaka regions, with prices ranging from BDT 93,000-94,000/t ($850-859/t) and BDT 83,000-84,000/t ($758-767/t) respectively. Local ship-breaking scrap is priced at BDT 60,000/t ($548/t) ex-yard.

The Bangladeshi taka remains largely stable against the US dollar, trading at around 109.45 w-o-w.

As per the latest news report, Bangladeshi mills are now focusing on replenishing their inventories in preparation for post-monsoon production. The nation's steel production ambitions are noteworthy, with plans to double production by 2030. Current per capita steel consumption stands at 45 kg, and this is expected to rise to over 100 kg per capita by 2030. The steel sector is projected to grow at a rate of 10%, resulting in an estimated total production of 1.6 crore tonnes in a decade, doubling the current production levels.

Bangladesh Steel Manufacturers Association and entrepreneurs highlight that the country's steel production capacity has significantly expanded over the past decade. Formerly producing 2.5 lakh tonnes of MS Rod annually, the current annual production and marketing have reached about 60 lakh tonnes. Expansion efforts, particularly by companies like BSRM and GPH Ispat, have increased the combined production capacity to 90 lakh tonnes, and this is anticipated to rise to 1 crore tonnes by 2030.

Outlook

Bangladeshi mills are now looking to replenish inventory for post-monsoon production which might increase the imported scrap volume in near-term. Meanwhile, sourcing from alternate origins like Australia and Hong Kong might be frequent as buyers less preferred UK and US-origin materials as per market participants.