Bangladesh: Imported scrap prices drop $6/t w-o-w; mills wary despite discounts amid slow rebar sales
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- Slow progress in infra projects limits procurement
- LC approval issues ease but inquiries stay limited
The Bangladeshi imported scrap market remained subdued this week, with minimal deals and limited buyer inquiries. This was due to slow progress in infrastructure projects and weak rebar sales, despite discounts offered in both the Chattogram and Dhaka regions.
Imported scrap prices dropped by $6/tonne (t) w-o-w amid cautious buying and expectations of lower bids. Domestic steel demand was weak, limiting inquiries for deep-sea or overseas deals. Additionally, trades were limited, though letter of credit (LC) approval processes are improving. Production is at 50-55% of total capacity at major mills, compared to 60% last week.
Notably, both finished steel and domestic scrap prices decreased by BDT 1,000/t ($8/t) over the past week in Dhaka. Domestic scrap was offered at BDT 49,500-50,000/t($410-418/t) this week compared to BDT 50,500-51,000/t($418-427/t) last week. Rebars were at BDT 83,000/t ($695/t) this week compared to BDT 84,000/t ($703/t) last week.
BigMint's weekly assessments
- European-origin containerised shredded dropped by $2/t w-o-w to $388/t, while HMS (80:20) declined by $6/t w-o-w to $374/t.
- US-sourced HMS (80:20) bulk prices softened by $3/t w-o-w to $372/t.
- Japan-origin H2 bulk prices dropped by $4/t w-o-w to $361/t CFR Chattogram.
Market scenario
Dhaka rebars stood at BDT 80,000-80,500/t ($669-673/t), with Chattogram prices higher by BDT 3,000-4,000/t ($25-33/t) at BDT 83,000/t ($695/t).
As per market insiders, UK/Europe offers for shredded were at $386-390/t, HMS at $370-374/t, and PNS at $400-410/t. Shredded from Australia and Malaysia was offered at $390-395/t CFR, while HMS from Africa, Europe, and Southeast Asia stood at $355-368/t.
A Chattogram-based mill representative stated, "The market is sluggish due to the government transition, with steel demand subdued. Billets are at BDT 66,000-67,000/t ($552-559/t), Dhaka rebars are at BDT 77,000-79,000/t ($645-661/t), while Chattogram mills are offering them at BDT 83,000-83,500/t ($694-697/t), down by BDT 500-1,000/t ($4-8/t) w-o-w. Domestic scrap is trading at BDT 49,000-50,500/t ($410-422/t)."
A Dhaka-based importer observed, "We booked 2,000 t of PNS at $390/t from Malaysia on an LC at sight term. The shipment will arrive in December. However, finished product sales remain slow, and production has been cut. We are operating at 50% of our capacity."
A US-based supplier remarked, "Buyers are quoting $384-385/t for shredded, $370-372/t for HMS from EU/UK, and $376-378/t for Australian HMS 1, depending on LC approval and shipment month. Malaysian PNS is being offered at $395-400/t, but suppliers are reluctant, providing material only with certain conditions. No bulk offers from the US have been made recently, but indicative levels are at $370-375/t, with Japanese H2 at $360-363/t CFR Chattogram."
A Chattogram-based importer remarked, "We received offers from Singapore for HMS 1 at $388-389/t CFR, but we did not show much interest due to sufficient inventory."
Recent deals
- Around 1,000 t of UAE-origin HMS mix PNS was booked at $390/t CFR Chattogram.
- Approximately 2,000 t of Malaysia-origin PNS was sold at $390/t CFR Chattogram.
Bangladesh's ship-breaking market remains under pressure, hindered by a stalled economy, high inflation, and fluctuating prices. Tonnage increased w-o-w to 36,386 LDT last week, though with only one large bulk carrier arriving. Financial challenges persist, with a weakening taka, shrinking GDP, and declining US dollar reserves. A downgraded banking sector has exacerbated the uncertainty in the market, with difficulties potentially continuing into 2025. Meeting Hong Kong Convention (HKC) standards by mid-2025, considered by several countries as the target year for enforcement, also seems increasingly unlikely.
Outlook
Imported scrap is expected to drop by another $5-6/t owing to a bearish demand in the global scrap market. Consequently, the market is likely to hold off on transactions if offers remain firm in the coming days. Additionally, the price gap between imported and domestic scrap stood at BDT 1,000/t, making imported scrap costlier. Parallelly, the outlook for the steel market remains cautious, with mills operating at just 50% capacity.
