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Bangladesh: Imported scrap prices show mixed trends, local material sees improved inquiries

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Melting Scrap

BigMint Bureau

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1 Jan 2025, 20:04 IST

Bangladesh: Imported scrap prices show mixed trends, local material sees improved inquiries

Mills now mandated to open only sight LCs

HKC compliance deadlines pressure shipyards

Bangladesh's imported scrap prices witnessed a mixed trend over the past week. Imported containerised scrap prices saw a slight increase of $2-3/tonne (t) w-o-w. For bulk scrap, inquiries remained sluggish, and buyers continued to keep their bids low, resulting in a $4-6/t w-o-w price decrease, particularly for scrap from Japan and the US.

The local scrap market saw improved inquiries, with prices rising for key grades: PNS at BDT 55,000/t ($460/t), HMS (90:10) at BDT 53,000/t ($443/t), and regular HMS at BDT 49,500-51,000/t ($414-427/t). While activity remained subdued due to the bank year-end, a rebound is anticipated in the coming week.

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European-origin containerised shredded was up by $2/t w-o-w at $394/t.

European-origin HMS (80:20) increased by $3/t w-o-w to $374/t.

US-sourced HMS (80:20) bulk prices decreased by $4/t w-o-w to $364/t.

Japanese-origin H2 bulk prices fell by $6/t w-o-w to $349/t CFR Chattogram.

According to market participants, Bangladeshi mills are now mandated to open only sight letters of credit (LCs) due to frequent defaults in usance LCs. Unlike sight LCs, where payment is made immediately upon presentation of the required documents, usance LCs allow the buyer more time to settle the payment.

As per market insiders, the scrap market is seeing an increase in prices due to a stronger dollar, material shortages, and the start of old construction projects.

Bulk HMS offers from Singapore were at $335/t FOB, translating to $375-380/t CFR Chattogram. PNS was at $350/t FOB or around $390/t CFR. H2 from Japan was priced at approximately $345/t CFR Chattogram, with limited demand. US offers ranged within $370-375/t, but buyers bid below $360/t.

Market scenario

A major Dhaka-based mill source commented, "Local demand and banking improvements have lifted market sentiment, but I do not expect it to last. A Chattogram-based mill raised rebar prices by BDT 4,000-5,000/t ($33-42/t) recently, driven by ongoing projects such as highway ramps. The mill also holds significant government project stocks and maintains strong corporate sales."

A major Chattogram-based trader commented, "The market sentiment is mixed. While the maximum price of PNS is around $390/t, I believe my material is of superior quality, and I am holding onto my stock to secure better prices. However, there are concerns regarding Bangladesh's political situation, as it seems we may be heading towards another period of instability, which could potentially affect the market."

In the last 7-8 days, Bangladesh witnessed 10 containerised scrap deals from Hong Kong, the Philippines, Australia, and Malaysia, priced at $343-395/t. Two bulk vessels were also booked from Japan and the US in the last 10 days.

In the domestic steel market, billet prices were at BDT 70,000-71,000/t ($586-594/t), while rebar prices were at BDT 82,000-83,000/t ($686-694/t) for Chattogram-based mills and BDT 79,000-80,000/t ($661-669/t) for other mills in Dhaka.

Additionally, Bangladesh's ship recycling sector continued to face challenges due to economic pressures, weak demand, and a depreciating currency. Only a small sub-2,000 LDT tanker arrived for recycling this week, and domestic mills were largely inactive, keeping ship steel plate prices at around $521/t. The Bangladeshi Taka's depreciation, trading near BDT 119.99/USD, further restricted recyclers' ability to secure competitive deals. Additionally, HKC compliance deadlines intensified pressure on Chattogram's shipyards. Last week, Chattogram Port received just 1,969 LDT, down from 32,607 LDT in the preceding week.

Outlook

Imported containerised scrap offers are expected to remain firm, with strong demand in South Asia post-holidays. Local market activity is improving, but future uncertainty remains. Despite market challenges, recovery is expected in 2025, aided by a proposed budget increase and the availability of larger vessels for recycling. However, HKC compliance deadlines and limited certified yards are expected to add pressure.