South Asia: Imported ferrous scrap market remains slow amid LC issues in Pakistan and Bangladesh

The South Asian ferrous scrap market registered sluggish activity, as major buyers have been reeling under the pressure of banks not authorising letters of credit (LC), which is making it difficult for them to book large quantities.

Market overview

India: The Indian ferrous scrap market has been steady for the last three days. Offers for Europe-origin shredded scrap are still being heard at $430-435/t CFR Nhava Sheva. Meanwhile, HMS (80:20) scrap is being heard at $405-410/t CFR Chennai from West Africa, unchanged d-o-d.

Market participants opine that considering the prevailing buying trend in India, it is anticipated that prices might touch highs of $450-455/t for shredded scrap by the end of September. Similarly, steel-making raw material, iron ore, is also projected to reach $112-113/t next month. Additionally, demand is on the rise from other Asian nations. The surge in prices observed in Turkiye is compelling others to enter the market regardless of the price they secure, creating a situation where purchasing becomes a necessity.

The domestic scrap market is witnessing fluctuations in terms of prices, as scrap movement was heard in the southern region of India, while in the Mandi region in north India prices remain range-bound on moderate trades.

Pakistan: Despite some uptick in the market, market sentiments are bearish, as Pakistani buyers are facing issues with opening of LCs from banks. Current offers for Europe-origin shredded scrap are firm at $435-440/t, unchanged d-o-d.

"Despite some improvement in the last couple of days, the market is slow because we cannot open LCs easily. Some banks are processing unconfirmed LCs. Smaller tonnage deals have been concluded over the last couple of days", a source informed SteelMint.

Bangladesh: The imported ferrous scrap market in Bangladesh is quite dire. The central bank has refused to authorise any letter of credit (LC) transactions, which is making it difficult for buyers to reserve any material.

Deals in shredded material have been secured from Australia at $455/t, while offers for HMS (80:20) are being presented at $420/t, also from Australia. Buyers are preferring Australian and Hong Kong materials over US and European cargoes because of the superior quality at negotiable rates.

Turkiye: The Turkish ferrous scrap market remains at a moderate level as market participants largely expect a pause in activity amid restocking seen last week. Yet a couple of deals were heard from the US and Europe. As per sources, spot bookings for cargoes are limited now, and the market may take a pause now, as no major offers were heard into Turkiye at $370/t levels.

Recent deals:

• Around 1000 t of US origin shredded booked at $437-440/t level recently on a CFR Qasim basis
  
  
• Approx 1000 t of Australian Shredded booked at $455/t on a CFR Chattogram basis
  
  
• 1000 t of US-origin shredded scrap booked at $432/t on a CFR Nhava Sheva basis.
  
  

Price assessments

• India: UK-origin shredded scrap offers were at $435/t CFR Nhava Sheva, unchanged d-o-d
  
  
• Pakistan: UK-origin shredded scrap offers were at $440/t CFR Qasim, stable d-o-d.
  
  
• Bangladesh: Offers for UK-origin shredded scrap were at $445/t CFR Chattogram, unchanged d-o-d
  
  
• Turkiye: US-origin HMS 1&2 (80:20) prices are down by $2/t to $370/t CFR Turkiye.
  
  

Outlook: The South Asian market continues to remain in balance amid firm offers from sellers and uncertain market sentiments in Turkiye. However, the Indian and Bangladeshi markets might witness a few bulk deals, while Pakistan may take a break from bookings due to LC opening issues.