Bangladesh: Imported ferrous scrap offers rise $5/t w-o-w despite dull sentiments

Imported ferrous scrap offers in Bangladesh increased by $5/t w-o-w, influenced by recent transactions and a slight improvement in the Turkish scrap market. As a result, current offers for shredded scrap from the UK and Europe were reportedly in the range of $408-410/t CFR Chattogram. However, despite the rise in offers, market activities remained limited due to the reemergence of delays in LC approvals and the observance of Ramadan festivities.

According to market participants, "LC issues have reemerged, particularly impacting smaller buyers. Some buyers are postponing bookings, expecting smoother transactions in shipments scheduled for April and early May."

"I believe mills are less inclined towards bulk bookings, having already secured several lots from the USA and Australia earlier this month," remarked a trader.

Additionally, sources indicate that with construction slowing down during Ramadan, both the longs and scrap markets are not anticipated to witness any improvement in activity.

Japanese H2 scrap offers were in the range of $385-390/t, while US-origin HMS (80:20) bulk indicatives ranged from $390-395/t, with buyer inquiries at around $390/t CFR Chattogram.

Offers for HMS-PNS mix from UAE origin remained within the range of $410-$415/t, yet there is limited interest from buyers at this price level.

Recent deals

• A parcel of 1,000 t HMS (90:10) originating from Australia was secured at $395/t CFR Chattogram.
  
  
• Around 1,000 t of Europe-origin shredded scrap was booked at $410/t CFR Chattogram.
  
  
• About 1,000 t of PNS scraps were booked from Australia at $420/t CFR Chattogram.
  
  
• Approximately 1,000 t of HMS bundle from Brazil was procured at $365/t CFR Chattogram.
  
  
• Around 2,000 t of PNS scraps were sourced from Hong Kong at $433/t CFR Chattogram.
  
  

Domestic market updates

In the domestic market, rebar prices hovered at around BDT 90,000-95,000/t exw-Chattogram, while 85,000-89,500/t exwDhaka. While scrap prices were heard in the range of BDT 63,500-64,500/t exw.

As per a local media source, the Bangladeshi steel industry is facing a severe challenge with operational costs soaring by 65%, posing a threat to manufacturers' loan repayment capability. According to the Bangladesh Steel Manufacturers Association (BSMA), the industry's financial strength has weakened due to the US dollar's appreciation against the local currency and rising utility prices. Insufficient import quantities due to difficulty in opening LCs disrupt the supply chain, with banks offering reduced credit limits. The industry's dependency on imports for 85% of raw materials exacerbates the situation, demanding more working capital. With production costs escalating and demand declining, the industry is operating at less than 40% capacity, urging measures such as extending loan durations and adopting austerity measures.

Outlook: Concerns over LC issues hindering fluent bookings and as per market insiders potential price drops can be possible. For instance, EU-origin HMS might decline to $390/t and $400/t for shredded, as market sentiment suggests a downward adjustment in near term.