Bangladesh: Imported scrap prices show mixed trend w-o-w amid cautious buying inquiries

The Bangladesh imported ferrous scrap market observed a varied price trend amid ongoing political unrest following the elections, resulting in reduced scrap offers and subdued interest from buyers. Shredded scrap prices from Europe were noted at $440-445/t CFR Chattogram, while HMS (80:20) was reported at $415-420/t CFR.

Despite a smaller bulk cargo completion at this level, the overall market price in Bangladesh has not seen significant changes. It's important to emphasize that this isolated transaction doesn't necessarily indicate an overall uptrend in the entire market. Bangladeshi mills are facing competition from counterparts in Vietnam and South Korea to secure Japanese material; however, in the recent Kanto tender for January 2024, buyers were able to secure materials at relatively higher costs.

A trader mentioned, "There is still political unrest in Bangladesh, and the market is expected to remain slow until month-end."

SteelMint's Europe-origin shredded container assessment stood at $442/t, witnessing a $3/t increase w-o-w after a mid-week price drop.

Recent offers

• US-origin bulk offers for HMS (80:20) were heard at $425-430/t CFR Chattogram.
  
  
• Containerised shredded offers from the UK/Europe were heard at $440-445/t on a CFR Chattogram basis.
  
  
• Containerised HMS & PNS mix offers from the Middle East were heard at $424-426/t CFR.
  
  
• Japan-origin H2 scrap offers were heard at $425-428/t on a CFR Chattogram basis.
  
  
• Shredded from Australia was offered at $435-440/t and HMS 1 from the Middle East was offered at $425-428/t.
  
  

Recent deals

• Approximately 1000 t HMS (90:10) from Australia were sold at $415/t on a CFR Chattogram basis.
  
  
• Around 1000 t Australia-origin HMS Sheared were booked at $411/t CFR Chattogram.
  
  
• 1000 t of PNS from Malaysia were sold at $443/t on a CFR Chattogram basis.
  
  
• 1000 t of Australia-origin Shredded scrap were booked at $435/t CFR.
  
  
• Approximately 1000 t Middle East origin HMS were booked at $430/t CFR Chattogram.
  
  
• Around 50 t Middle East HMS were booked at $420/t on a CFR Chattogram.
  
  
• 500 t Hong Kong origin PNS scrap was sold at $440/t on a CFR Chattogram basis.
  
  
• 500 t Malaysia-origin Bundles were booked at $400/t on a CFR Chattogram basis.
  
  
• 1000 t Peru-origin HMS 1 were booked at $428/t on a CFR Chattogram.
  
  

Domestic market: In terms of prices, rebar was quoted at BDT 87,000-90,000/t in rolling mills, while major primary mills' rebars were priced at BDT 94,000-96,000/t across grades. Ship-breaking scrap prices were reported at BDT 67,000-70,000/t, busheling scraps at BDT 69,000/t, PNS scraps at BDT 70,000-72,000/t ex-works, whereas billet prices hovered at BDT 75,000-77,000/t on an ex-works basis.

Policy rate: According to the industry report, The Bangladesh Bank has increased the policy rate by 25 basis points to 8% from 7.75% in its newly unveiled monetary policy for the second half of FY'24 (January-June). Governor Abdur Rouf Talukder announced a contractionary policy stance to curb inflation and introduced a new exchange rate mechanism called the crawling peg.

All monetary targets were revised downward to limit money supply, reducing private sector credit growth to 10% for June from the previous target of 11%. The central bank identified global fuel price dynamics, instability in the Middle East, international commodity prices, inflation control, exchange rate stability, and non-performing loans as major challenges.

Despite previous statements targeting an 8% inflation rate by December, the latest data from the Bangladesh Bureau of Statistics indicates a rate of 9.41% for the month. The governor remains optimistic, projecting a decline to 6% by June 2024.

LC scenario: Across the import market, LC settlements in December were at a three-year low of $4.53 billion, the lowest since November 2020. Bankers attribute the LC decline to two types-sight LCs and deferred LCs. Sight LCs ensure immediate payment upon meeting conditions, while deferred LCs allow a 90-180-day payment window. Currently, LC margins vary based on bank-client relationships, with 75% to 100% margins for luxury goods. High LC margins, up to 100%, impede competition among importers.

Outlook: Market insiders anticipate volatility in the Bangladeshi imported scrap market, attributing it to subdued demand for finished steel. Despite the current lull, scrap buyers express optimism, foreseeing an influx of funds into the market post-election.