Bangladesh: Imported ferrous scrap prices rise by $7/t w-o-w; LC delays affect trades

In Bangladesh, market activities continued to remain weak due to high offers and lower acceptance from the buyer side amid weaker parity. Shredded scrap offers from Europe were heard at $420-425/t CFR Chattogram, while HMS (80:20) stood at $405-408/t CFR. The majority of buyers are facing LC delay-related issues.

Malaysian busheling bundle offers were heard at $440/t CFR Chattogram level but not workable whereas, PNS offers from Europe and Hong Kong were heard at around $430-435/t CFR as per market survey.

According to a trader,"We have not received any bids for Chattogram this week. The country is currently facing economic challenges, particularly with weaker foreign reserves. The finished steel market is also underperforming, and we anticipate a drop in steel prices. The ongoing election environment will likely impact small-scale traders and buyers for a few more days."

Bangladesh's bulk ferrous scrap imports increased by 24% to 359,396 tonnes (t) in October 2023 in comparison with 290,186 t in the previous month, as per SteelMint data. However, y-o-y, imports decreased by 38% compared to 581,094 t in October 2022.

Recent Offers

• US-origin bulk offers for HMS (80:20) were heard at around $400/t CFR Chattogram.
  
  
• US-origin Shredded bulk offers were heard at around $405-408/t and Bonus offers at $410-414/t CFR Chattogram.
  
  
• Containerised HMS(80:20) scrap offers from Australia were heard around $400/t and shredded at $418-420/t CFR.
  
  
• Containerised shredded offers from UK/Europe were heard at $425/t on a CFR Chattogram basis.
  
  
• Containerised HMS & PNS mix offers from the Middle East were heard at around $420/t CFR.
  
  

Recent deals

• About 1,000 t of PNS scraps were sourced from Australia at $425/t CFR Chattogram.
  
  
• Approximately 3,000 t of shredded scraps were booked from Europe at $420/t CFR Chattogram.
  
  
• A parcel of 1,000-t HMS (90:10) scraps were procured from Brazil at $410/t CFR Chattogram.
  
  
• Around 1,500 t shredded scrap from Europe were booked at $420/t CFR Chattogram
  
  
• Around 1,000 t of shredded scrap were booked from Australia at $415/t CFR Chattogram
  
  

Domestic market:

In the domestic market, local ship-breaking scrap offers were heard between BDT 61,500-62,500/t, whereas PNS-grade scrap was heard at around BDT 66,000-68,000/t. Rolling mills offered rebar in the range of BDT 81,000-82,000/t exw Dhaka, while primary mills priced their products above BDT 90,000-94,000/t exw Chattogram. Billet offers were heard at around BDT 78,000-80,000/t exw Dhaka.

A mill-based source noted that the Bangladesh steel market is facing multiple challenges, including a dollar crisis and adverse political situation. Despite the "season," market sentiment does not support the steel business. This situation is expected to continue for 60-75 days or more, with subdued demand due to political uncertainties.

Bangladesh's general inflation rate in October rose to 9.93%, up 30 basis points from September's 9.63%. This increase threatens to reach double digits before the end of the year. In 2023, the average inflation stands at 9.5%, exceeding the government's 6% target. The Bangladesh Bureau of Statistics released the updated Consumer Price Index data for October.

Bangladesh's forex market remains volatile, with remittance rates trading between BDT 123 and BDT 124 per dollar, higher than the official rate of BDT 110.50. This marks the highest remittance rate since October 22. The gap between remittance and import rates has widened to BDT 13 per dollar, discouraging banks from purchasing remittances. The remittance rate, previously at BDT 120, has been on an upward trend this month. The Association of Bankers Bangladesh removed the 2.5% cap on incentives for remittances, giving banks the autonomy to set their own incentive rates. Each bank's board of directors must approve these rates.

Outlook: The imported scrap market in Bangladesh is anticipated to stay subdued. Experts predict that containerised scrap prices will continue to rise due to supply constraints before the winter season, making it challenging for buyers to secure significant deals, especially due to LC-related issues. Additionally, the bulk booking in the upcoming Kanto tender may contribute to volumes in the coming days.