Bangladesh: Imported scrap prices down $2/t w-o-w amid LC challenges, stalled govt projects
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- LC challenges and weak demand hinder scrap imports
- Domestic scrap shortage reorients Dhaka mills' sourcing patterns
Bangladesh's imported scrap market remained slow this week and imported scrap prices fell by $2/t due to ongoing LC challenges and the suspension of government projects.
The imported scrap market continued to grapple with challenges this week, marked by low activity and cautious sentiment. Mills faced significant hurdles with LC approvals taking 2.5-3 weeks and stricter financial conditions imposed by the caretaker government, which has blocked accounts of key industry players and restricted several banks linked to past controversies. While bulk purchases are being handled by larger mills, smaller players struggle to secure materials amid liquidity constraints.
Domestic scrap shortages and reliance on shipbreaking scrap, which remains more economical than imports, have reshaped sourcing strategies, particularly for Dhaka-based mills. The overall demand for rebar has seen some seasonal improvement, but the market remains subdued due to stalled infrastructure projects and weak construction activity. Local steelmaker's combined monthly sales have plummeted from half a million tonnes earlier this year to just 1 lakh tonnes, further signaling a downturn
BigMint's weekly assessments
- European-origin containerised shredded was down by $1/t w-o-w at $392/t.
- European-origin HMS (80:20) stable w-o-w to $371/t.
- US-sourced HMS (80:20) bulk prices decreased by $2/t w-o-w to $368/t.
- Japanese-origin H2 bulk prices fell by $6/t w-o-w to $355/t CFR Chattogram.
Recent deals:
- 1,000 t of PNS (Malaysia ) was sold at $395/t CFR Chattogram.
- 1,000 t of HMS (90:10) (Australia) was booked at $360/t CFR Chattogram.
- 4,000 t of PNS (Hong kong) was sold at $365/t CFR Chattogram.
- 4,000 t of Hb bundles (Hong kong) was bought at $343/t CFR Chattogram.
- 500 t of bundles (Philippines) was bought at $330/t CFR Chattogram.
Despite slight rebar price increases and efforts to ramp up production, the ongoing dollar rate fluctuations and the government's lack of business support continue to weigh on sentiment. Chattogram mills, though relatively better positioned, are cautious given weak project demand. Looking ahead, while rebar demand may offer some support, broader economic and political challenges are likely to keep the market under pressure in the near term.
As per market participants, in Dhaka, rebar prices were at BDT 78,000-80,000/t ($654-670/t), while in Chattogram, tags stood at BDT 80,000-82,000/t ($670-687/t). Billet prices were at BDT 62,000-63,000/t ($520-528/t).
A market participant informed, "Taking into account the landed cost of imported scrap, an extra BDT 10,000-15,000/t was needed, along with approximately BDT 1,000/t for transportation from Chattogram to Dhaka."
Bangladesh's ship-breaking market faces challenges due to weak demand from steel mills, reduced orders, and a shortage of US dollars. Steel plate prices fell to $521/t, and despite a $500 million loan for reserves, recyclers remained cautious. Chattogram received 32,607 LDT of tonnage last week, up from 43,936 LDT the previous week.
Outlook
Chattogram mills, relying on imported materials, are expected to manage the next quarter easily due to low demand for new projects. The current caretaker government is unsupportive of businesses, especially in the steel sector. With elections not expected until late 2025 or early 2026, uncertainty remains. Economists suggest a market-driven approach to stabilise the exchange rate, despite short-term fluctuations. Upcoming loans from the IMF, World Bank, and ADB may help improve the situation with strong measures.
