Bangladesh: Imported scrap prices rise $3/t w-o-w; major mills reduce purchases amid ample inventories

• Weak demand persists amid slow construction activity
  
  
• Domestic rebar producers maintain discounted prices
  
  

In Bangladesh's imported ferrous scrap market, Europe-origin scrap prices edged up by up to $3/tonne (t) w-o-w, following global cues. Meanwhile, steel production levels in major mills remained low, with operational halts in some mills impacting market sentiments.

Bangladesh's steel industry is in a challenging phase, with limited growth prospects, as the government struggles to address critical issues. Delays in construction projects, especially in rural areas, have resulted in high inventories of unused steel at mills, which are being sold off at discounts to clear space. However, with sluggish demand, these efforts have not revived market activity. Though Dhaka law enforcement remains strict following political disturbances, Chattogram has seen some operational relief.

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• Europe-origin containerised shredded rose $3/t w-o-w to $400/t, while HMS (80:20) prices increased by $1/t w-o-w to $385/t.
  
  
• US-origin HMS (80:20) bulk prices were stable w-o-w at $380/t.
  
  
• Japan-origin H2 bulk prices held steady w-o-w at $370/t CFR Chattogram.
  
  

Market scenario

As per a major trading house representative, major mills have sufficient scrap inventories and can sustain minimal production until January. Consequently, leading producers such as BSRM, KSRM, and AKS are cautious about additional purchases due to weak demand and a slow market outlook. Bids for South American HMS bundles were at $350-355/t, impacted by sluggish demand.

Another importer said that importing scrap has become costlier, with container shipping from Australia to Bangladesh now priced at $1,800-1,900 for a 20 ft container as against $1,650-1,700 some weeks ago.

HMS (80:20) from Australia was offered at $375-378/t, with shredded $20/t higher at $395/t, and Malaysian shredded was priced at $395-400/t, he added.

A bulk scrap supplier from Japan mentioned that despite offers at $370-372/t CFR, mills are holding firm at bids below $365/t, which is putting pressure on suppliers to adjust to these lower price expectations.

US-origin HMS(80:20) bulk scrap was offered at $380-385/t, though Bangladesh mills capped their bids at $370/t.

Securing letters of credit (LCs) has become a significant hurdle, with banks reluctant to approve LCs promptly if companies have links to loan defaulters. This has stalled trade further. Currency challenges have also compounded financial troubles, with the exchange rate officially at 120 BDT/USD, but actual transactions occurring at 124-125 BDT/USD, raising import costs.

Recent deals

• 2,000-t shredded from Australia was booked at $400/t CFR Chattogram.
  
  
• 3,000-t HMS-1 90/10 from Australia was purchased at $380/t CFR Chattogram.
  
  
• 1,000-t PNS from Hong Kong was sold at $425/t CFR Chattogram.
  
  
• 1,500-t AB bundles from Hong Kong were bought at $375/t CFR Chattogram.
  
  
• 500-t HMS bundles from Singapore were purchased at $373/t CFR Chattogram.
  
  
• 1,000-t HMS (90/10) from Chile was sold at $380/t CFR Chattogram.
  
  
• 1,000-t pure PNS from Hong Kong was purchased at $430/t CFR Chattogram.
  
  

The domestic steel market remained slow, with poor sales of finished steel. A Chattogram-based mill increased rebar discounts by another BDT 500/t ($4/t), totaling BDT 5,000-6,000/t($42-50/t) over the recent 3-4 weeks stood at BDT 84,800-85,000/t($707-710/t)), which has driven caution among buyers regarding further price declines. Current prices are at BDT 85,000/t ($710/t) (ex-Chattogram) and BDT 81,000-81,800/t ($677-684/t) (ex-Dhaka), while local scrap prices are at BDT 51,000-52,000/t($426-435/t) depending on quality.

As per a market insider, shipbreakers in Chattogram have maintained prices at BDT 50,500-51,800/t, yet uncertainty prevails amid low steel demand.

In the ship recycling market, increasing tonnage faces environmental constraints and LC restrictions, limiting scaling efforts.

Bangladesh Steel Re-Rolling Mills (BSRM) has launched a new 600,000 tonnes per year (tpy) rebar mill in Chattogram, raising its total long-product capacity to 2.4 million tonnes per year (mntpy). The mill produces 8-50 mm rebars in 6-18 m lengths and coils. Despite a sluggish local market impacted by slow government projects and payment delays, BSRM proceeded with this expansion. An insider noted that production has started, though current market conditions may keep utilisation low, with a sector recovery unlikely before November. Previously, BSRM's capacity stood at 2 million tpy for billets and 1.8 mntpy for long products.

Outlook

The outlook for Bangladesh's steel industry remains cautious, with rising scrap prices and currency fluctuations. Producers are holding inventories, but weak demand suggests ongoing challenges, with recovery dependent on better construction activities in the near term.