Ship recycling sector slows down amid rising inflation
Bangladesh's imported ferrous scrap inquiries remain weak with bid levels falling by $5-6/t w-o-w in the market. Indicative prices for shredded material from the EU and UK stood at $400-405/t, but buyer interest is weak.
Bulk offers from the US remain slow, with recent quotes around $385-390/t. However, a bulk buyers are wary due to issues with letters of credit (LC) and ample inventory.
Market insights
A mill source stated: "Over the past few days, a Dhaka-based steel mill has not purchased scrap due to high prices, with HMS (90:10) costing $390/t and shredded at $408/t, both from Australia."
A Bangladeshi trading house representative stated: "Demand is low with no pressure to buy. Buyers expect bulk HMS (80:20) at $370/t." Prices, previously at $400-410/t, have dropped by $10/t, with current offers at $400/t for HMS and $410-415/t for shredded. LC issues are limiting buyer activity, and Indian buyers remain quiet.
A Bangladesh-based importer said, "Containerised offers to Chattogram from Australia stood at $390/t for HMS (90:10), with bids ranging between $382-385/t, while shredded was offered at $405-410/t, with bids at $395-396/t."
Southeast Asian offers included Hong Kong/Malaysia PNS at $420-422/t, and Malaysian bushelings at $428-430/t, though no firm bids were noted. UAE suppliers offered HMS 1 at $400-405/t, with bids at $395-398/t, he added.
As per market insiders, in the bulk scrap market, offers from Japan for H2 were $380-385/t, with bids at $370-375/t, and HS was offered at $400-405/t, with bids at $390-395/t. From the US, HMS (80:20) mix was offered at $390-392/t, with bids at $375-380/t, while shredded was offered at $400-402/t, with bids at $395-396/t.
A major trading house representative noted that buyers are securing small quantities regularly. South American HMS (90:10) is priced at $360-365/t, GI bundles from the Philippines/Thailand at $362-365/t, and Australian shredded are being offered at $405/t, with bids at $395/t. There is no interest in bulk offers, and major buyers have been inactive since July and August.
Recent deals:
1,000 t of HMS & PNS mix from UAE was booked at $415/t CFR Chattogram
800t of HMS & PNS mix from Chile were sold for $410/t CFR Chattogram.
BigMint's weekly assessments
Europe-origin containerised shredded scrap fell by $2/t w-o-w to $400/t, while HMS (80:20) prices dropped $2/t to $387/t.
US-origin HMS (80:20) bulk prices declined by $4/t to $381/t.
Japan-origin H2 bulk prices rose by $3/t w-o-w to $370/t CFR Chattogram.
Domestic market
In the domestic market, steel rebar prices are at BDT 83,000-84,000/t, with the lowest at BDT 80,000/t. Billet is priced at BDT 66,000-67,000/t. Local scrap is BDT 50,500-51,500/t, and local PNS is BDT 53,000-55,000/t. Demand remains weak, with no fresh inquiries in local scrap in recent days.
Bangladesh's ship recycling markethas slowed significantly, impacted by rising inflation (over 9%), dwindling dollar reserves, and political instability ahead of the general elections. The World Bank has downgraded the FY'25 growth forecast to below 5%. Ship recycling demand has stalled, with steel prices stuck at $533/t and mills shuttered. The weakening taka, nearing BDT 120 to the dollar, has further hurt market activity. Despite some small vessel commitments, market sentiment remains weak, with 34,278 LDT arriving at Chattogram Port this week. The outlook for Q4 2024 remains bleak.
The interim government dissolved the BGMEA board and appointed Md Anwar Hossain as administrator to oversee elections within 120 days. Leadership changes and unresolved issues, including labour unrest, led to the government's intervention after the resignation of SM Mannan Kochi.
Bangladesh Bank's anti-money laundering measures boosted the dollar supply, enabling $1.5 billion in debt repayment. Remittances reached $1.553 billion in the first 19 days of October, averaging $87 million daily, further supporting liquidity.
Outlook
In the imported scrap segment, small-scale bookings are expected to persist due to limited demand, with rebar sales in the construction sector likely to be driven by spot discounts and rebates. However, concerns over the depreciating BDT continue to hinder fresh LC openings by importers.
