Bangladesh: Imported ferrous scrap market slow amid weak sentiments w-o-w

Bangladesh's imported scrap market experienced a slow week following the Kanto tender in June, with lower demand for UK-origin materials. Buyers showed preference for Hong Kong and Australian scrap due to better margins and quality. The domestic steel market continued to be sluggish, with infrequent buying, indicating a sluggish scrap market in the country.

Participants mentioned that there are no restrictions on letter of credit (LC) openings, but the process is slow compared to usual. Additionally, the availability of domestic scrap does not meet the requirements, making the country rely more on imported materials currently.

Steel producers are under pressure to sell finished steel to maintain cash flow. Market players are hesitant to book fresh material, particularly with the upcoming Eid holidays.

Fresh offers and deals

Fresh offers in the market include US-origin bulk scrap, which increased slightly w-o-w to $420-425/t CFR. Japanese-origin H2 material also increased w-o-w and is priced at around $415-420/t CFR.

In the recently concluded Kanto tender, a Bangladesh-based steel mill secured 15,000 t of Japanese H2 grade material at JPY 48,167/t ($346/t) FAS, making it the fourth consecutive month that a Bangladesh-based steel mill has won the Kanto tender bid.

Participants are concerned about the weak foreign reserve, which will likely impact buying parity and keep it on the lower side, according to market sources.

SteelMint's assessment for UK-origin shredded scrap is at $455-460/t CFR Chattogram, slightly down by $5/t w-o-w.

In recent deals, 500 t of UAE-origin HMS(80:20) and Australian HMS (80:20) were traded at $450/t and $420/t, respectively, on a CFR Chattogram basis.

Domestic market slumpy

The domestic market remains stagnated, with some mills operating at 50% production capacity due to electricity problems, foreign reserve limitations, and the depreciated BDT. Expectations are that the exchange rate will reach the 110-115 level by the end of this month.

Fresh offers for rebar from Chittagong-based steel mills remained unchanged, with quotes ranging from BDT 98,000-99,000/t ($897-907/t) exw, w-o-w. Dhaka-based mills have been offering at BDT 90,000-92,000/t ($824-842/t) exw, unchanged w-o-w.

Local ship-breaking scrap prices have slightly increased w-o-w to BDT 64,000-65,000/t ($586-595/t) exy.

Outlook: The weak foreign reserve might continue to be a concern for participants, which could further affect buying parity. The sluggishness in the domestic steel market and the hesitancy among market players to book fresh material, combined with the upcoming Eid holidays, may continue to impact demand.