Bangladesh: Imported ferrous scrap market moderate w-o-w; buyers cautious

Bangladesh's imported ferrous scrap market is currently moving at a moderate pace, with no significant bulk deals reported in the last ten days. However, buyers are eagerly waiting for new bulk cargo bookings in this uncertain market. Some participants are closely observing the market, hoping to take advantage of further price correction which is likely to remain more cost-competitive, SteelMint learnt.

According to sources, in the last month, major mills have booked around 7-8 bulk cargoes of high-grade material from Japan. The reported prices ranged from $410 to $440/t CFR, depending on material grades. Interestingly, during the same period, around 80% of the bookings were for higher-grade material, instead of an usual preference for the H2 material. Some mills also booked material from the US bulk cargoes at approximately $420/t CFR levels.

Further, HMS (90:10) was heard to be booked from Poland, Australia, and Latin American origin. This shows that buyers are choosing other origins for viable prices in this soft market.

A major mill official mentioned that while some buyers are hopeful for a downward price trend due to low demand, others are ready to accept current offers. The near-term outlook for the market remains soft.

As per market sources, some sellers are a little bit aggressive while others are slow from the US and European markets not ready to give material as $400/t heard as bid for HMS (80:20) but offers were at $410. On the other hand, shredded offers were at $425-430/t range.

Fresh offers

• Offers for US-origin bulk scrap remain range-bound at $395-400/t CFR.
  
  
• Japanese-origin bulk H2 prices remain at around $405-410/t CFR, with a firm trend after the Kanto tender price.
  
  

The assessment for UK-origin containerised shredded scrap stands at $425-430/t CFR Chattogram, showing a decline of $10-12/t w-o-w according to SteelMint.

Domestic scrap market silent

The domestic scrap market is currently silent, with almost no scrap generation. Companies in the Dhaka region are facing difficulties in opening letters of credits (LCs). However, major mills managed to get LCs from banks though. The local ship-breaking scrap prices have slightly declined to BDT 60,000/t ($553/t) ex-yard.

In terms of domestic steel prices, rebar in Chattogram is priced at BDT 95,000 to 96,000/t ($875-884/t), while in Dhaka, it ranges from BDT 89,000 to 90,000/t ($820-829/t). Mills are hesitant to further reduce finished steel prices amid lack of demand from end-users.

The Bangladeshi taka is trading around 108.55 against the US dollar, remaining largely stable w-o-w.

BSRM, a prominent steel manufacturing company in Bangladesh, has opened the first-ever Indian rupee-based LC in Chattogram through the State Bank of India. The trial LC worth INR 4,84,000 ($5,899) was used to import spare machine parts from Sujex India. BSRM's Deputy Managing Director, Tapan Sengupta, views the settlement of LC payments in rupees as a positive step that can benefit businesses and help address the $14 billion trade deficit in bilateral trade with India.

The Asian Development Bank (ADB) has maintained its growth forecast for Bangladesh's gross domestic product (GDP) at 6.5% for the current fiscal year.

Outlook

The outlook suggests that the imported ferrous scrap market may experience a slight downturn until the next month on slow economic recovery, monsoon impact, and the lack of major scrap generation from the domestic market. Buyers have no choice but to rely on overseas materials to fulfill their basic demand and sustain production.