South Asia: Imported ferrous scrap offers drop further by up to $4/t - 12 Aug

The South Asian ferrous scrap market has experienced a downturn, marked by sluggish demand and falling prices across key regions. In India, steel mills have reduced their reliance on imported scrap, opting for sponge iron instead due to weak domestic finished steel sales. In Pakistan, limited interest in seaborne scrap is driven by slow steel sales and a recent money laundering scandal in the iron and steel sector. In Bangladesh, scrap inquiries have slowed amid payment constraints and reduced domestic steel consumption. Meanwhile, the Turkish market is facing price pressures, with declining offers and bearish sentiments as mills push for lower scrap prices.

Overview

India: In India, demand for imported scrap was nearly nonexistent today due to a lack of buying interest. Steel mills have reportedly scaled back production in response to weak domestic sales of finished steel. Many mills have also adjusted their charge mix, increasing the use of sponge iron instead of scrap.

Indicative offers for shredded scrap from the US and UK/Europe were assessed at $408-412/t CFR Nhava Sheva, but no buyers were present at these levels. Offers for HMS (80:20) were around $380-385/t, with buyers indicating tradable values closer to $370-375/t CFR.

Pakistan: Pakistani buyers have shown limited interest in acquiring seaborne scrap, choosing to purchase only at lower price points and on an as-needed basis. Sluggish domestic steel sales have further reduced scrap consumption in the sector. Indicative offers for shredded scrap from the UK/Europe were around $418-422/t CFR Qasim.

Recent reports revealed a PKR 9.7 billion money laundering scandal in Pakistan's iron and steel sector, involving nine importers who manipulated their manufacturing status to evade PKR 315 million in taxes and illegally transfer funds abroad. The Post Clearance Audit (PCA) South uncovered the scam during a sector-based audit, revealing that these importers falsely claimed tax exemptions and reduced duty rates intended for manufacturers while engaging in commercial sales without manufacturing facilities or business premises. Audit notices sent to these companies were returned as undeliverable, with the addresses proving untraceable. Further investigations have shown that these companies had minimal financial worth and some had not filed income tax returns despite financing large-scale imports. PCA teams are now intensively investigating to identify those responsible for the fraud.

Bangladesh: Bangladesh's inquiries for imported scrap remained slow today, as many buyers have yet to fully resume operations and are lacking confidence due to payment constraints and LC approval issues. The domestic steel market also remained sluggish, leading to lower scrap consumption. Last heard offers for shredded scrap from the UK/Europe were at $420-425/t CFR Chattogram, while HMS (80:20) were at $400-405/t CFR.

Market reports indicated that Bangladesh's electricity demand surged by 7% over three weeks of nationwide protests, despite disruptions to industrial and commercial activities. The protests, which began on 16 July, significantly impacted the economy, yet power demand rose to an average of 316 million kilowatt-hours per day. This increase was primarily driven by residential use of air-conditioners amid intense heat, contrasting with other developing Asian nations like India and Vietnam, where industrial consumption drives power demand growth. The rise in residential power use has led to a 26.6% increase in thermal coal imports, while liquefied natural gas (LNG) imports grew at a slower rate of 2.6%.

Turkiye: The Turkish imported scrap market experienced a decline, with offers for HMS (80:20) from the US at $377/t CFR, down $4/t from the previous closing. Two significant deals for US-origin scrap were reported during the week. The market is facing bearish sentiment, with sellers under pressure from Turkish mills to lower prices, despite stable collection costs in Europe. Some market participants expect further price declines, with potential trades around $375-376/t CFR. However, some sellers remained firm, rejecting lower bids, particularly for premium grades.

Price assessments

India: UK-origin shredded scrap indicatives were assessed at $412/t CFR Nhava Sheva, down by $3/t compared to the last closing on Friday.

Pakistan: UK-origin shredded indicatives were assessed unchanged at $420/t CFR Qasim compared to the last closing.

Bangladesh: UK-origin shredded prices were assessed stable at $424/t CFR Chattogram compared to the last assessed on Friday.

Turkiye: US-origin HMS (80:20) bulk prices were at $377/t CFR Turkiye, down by $4/t from the last closing on Friday.