Bangladesh: Imported ferrous scrap prices drop by up to $14/t w-o-w

In Bangladesh, the imported ferrous scrap market witnessed a relatively active week in terms of activities amid a continued downward trend in prices. Containerised shredded scrap from the UK and Europe dropped $10-14/t w-o-w, while HMS (80:20) offers also dropped to $395-400/t CFR Chattogram.

Approximately 4,500-5,000 t of containerised deals were closed in the last seven days involving various grades and origins such as Malaysia, Brazil, and Hong Kong.

BigMint's assessment for Europe-origin shredded scrap (containers) dropped by $14/t to $405/t, while HMS (80:20) containers dropped by $8/t w-o-w to $397/t.

As per market participants, Bangladeshi scrap importers secured multiple bulk deals from the US and Australia in the last seven to 10 days. Two bulk cargoes of HMS scrap, totalling 30,000 and 32,000 t, respectively, were sold by US recyclers to Bangladeshi mills at $395/t and $400/t on a CFR Chattogram basis. Additionally, a Bangladeshi mill booked 25,000 tonnes of bulk HMS (80:20) from Australia at around $395/t CFR.

BigMint's weekly assessment for US-origin HMS (80:20) bulk scrap witnessed a $19/t drop w-o-w and stood at $400/t on a CFR Chattogram basis.

Japanese H2 scrap offers were in the range of $388-394/t, while US-origin HMS (80:20) bulk indicatives ranged from $395-400/t, with buyer inquiries at around $395/t CFR Chattogram.

A mill source noted, "HMS (80:20) grade tradable enquires are at $390/t and shredded scrap indicative offers are at $400/t from the US and Australia in the bulk segment."

As per market participants, current booking levels would be $390-395/t for bulk and in containers $400-405/t for HMS, and shredded would be at $406-410/t, $390-400/t for US origin HMS bulk (price variations with LC days).

A representative from a major trading house said, "Bulk shredded scrap offers from Australia are on par with containerised European offers, ranging between $405-407/t. Currently, both bulk and container prices are nearly identical, with only a $2-5/t difference. However, buyers are showing more interest in booked containers from Australia and New Zealand due to the higher prices in Europe."

Significant container sales have not been made yet, as the focus remains on bulk sales. The situation regarding letters of credit (LC) has improved, with better foreign reserves leading to a positive trade balance.

Recent deals:

Around 500 t of Malaysia-origin busheling scrap was sold at $440/t on a CFR Chattogram basis.

Approximately 500 t of Brazil-origin PNS was sold at $430/t on a CFR Chattogram basis.

Around 1000 t of Malaysian Shredded scrap was sold $422/t CFR Chattogram basis.

Domestic market: In the domestic sector, rebar prices were BDT 89,000-90,000/t ($811-820/t) exw Dhaka, and BDT 96,500-97,500/t ($879-889/t) ex Chattogram, while billets were at BDT 78,000-78,500/t($711-715) exw. Local ship-breaking scrap prices are at BDT 63,300-63,600/t($577-580/t).

According to another mill source, "Domestic rebar sales have improved with some prospective infrastructure development post-election." There are no issues from the new government or opposition, and construction activities have picked up, leading to increased demand for long products, he added.

The gross reserve has been increasing due to higher remittance flow and currency swap arrangements put in place by the central bank. In February, migrant workers sent home $2.16 billion, marking a 39% increase compared to the previous year and the highest figure in eight months. The country recorded $2.19 billion in remittances in June last year, according to Bangladesh Bank data. Meanwhile, the central bank mobilised over $500 million from banks through currency swap deals by the end of February. However, these swaps do not contribute to raising net reserves as they represent a liability.

Outlook: In the near term, the outlook appears stable in the absence of scrap buyers from India and Vietnam, which has contributed to the stability in Bangladesh. There is no apparent reason for a further price drop in the coming weeks.