South Asia: Imported ferrous scrap offers firm amid scrap shortage

• Anticipated demand surges in India & Bangladesh; Pakistan's demand is stagnant.
  
  
• Spring in Europe boosts the supplier's domestic demand, posing challenges in scrap collection.
  
  
• Multiple bulk scrap bookings for India after two months of silence.
  
  

Today, the South Asian ferrous scrap market witnessed firm offers from suppliers amid a shortage in scrap and an expected demand rebound in India and Bangladesh. Conversely, Pakistan reported dull demand for imported scrap, with stagnant indicatives for shredded from Europe and the UK.

According to sellers and suppliers, it is currently more challenging to collect material and meet demand since significant purchases are occurring in spring. Local mills are increasingly sourcing scrap from the domestic market, leading to a shortage of material at present.

Shredded scrap indicatives declined by $3/tonne (t) in India and Bangladesh, while Pakistan remained largely stable. Additionally, US bulk HMS (80:20) offers to Turkiye increased by $2/t d-o-d.

Overview

India: Indian buyers are actively pursuing imported scrap due to heightened downstream demand and a scarcity of scrap within the local market. Recent indicative pricing for shredded scrap originating from the US and Europe ranged between $422-430/t CFR, while HMS (80:20) from Europe and West Africa hovered at around $395-400/t CFR.

According to a source, "The scarcity of scrap has made buyers cautious, leading to multiple bookings for India. Buyers are also keenly watching the shortage within the domestic market."

Another major trading house added, "Market sentiments are positive, fuelled by increased demand resulting from the shortage of scrap in the domestic market. In the short term, we anticipate a potential uptick of $5-10/t in imported offers."

It is noteworthy that, Indian steel mills have secured bookings of approximately six bulk scrap vessels in April 2024. The vessels, originating in the US west coast, are expected to reach most probably Kandla, Chennai, and Vizag ports, between May and June. The deals were heard at $400-405/t for shredded and $395-400/t for HMS (80:20). Bulk offers have increased by $5-10/t.

As per recent indications, the mood in the market is positive as supply is not strong. Plus, due to the elections (no trade of non-billed) and limited pipeline, Indian buying is good.

Pakistan: The imported market remains inactive for now, with buyers closely monitoring the rising price trend. Anticipation is that buyers will enter the market from next week. Current offers stand at $430-435/t CFR Qasim,

As per a mill source, steelmakers are cautious about future demand as there are no major projects which can give an estimated steel consumption trend for the upcoming months. Domestic working levels are at a moderate PKR 160,000/t exw.

Bangladesh: European and UK suppliers are currently offering shredded scrap at prices ranging between $420-$425/t CFR, while HMS (80:20) is priced at $405- $410/t CFR Chattorgam.

According to a major trading house, despite slow LC approvals, Bangladesh is actively countering these offers with interest from a few large mills.

Turkiye: Turkish imported ferrous scrap prices saw a slight increase, propelled by strong seller offers influenced by rising iron ore prices and heightened activity in the Indian scrap market. Indicative tradable values for US/Baltic-origin HMS (80:20) ranged from $378-382/t CFR, predominantly settling around $380/t CFR. Although a reported deal at $386/t from the US is pending confirmation, Turkish mills displayed interest in procuring May shipment cargoes, with multiple recyclers presenting offers from diverse origins.

Price assessments

India: UK-origin shredded scrap indicatives were assessed at $427/t CFR Nhava Sheva, down by $3/t d-o-d.

Pakistan: UK-origin shredded indicatives were assessed at $431/t CFR Qasim, slightly up by $1/t d-o-d.

Bangladesh: UK-origin shredded prices were assessed at $424/t CFR Chattogram, stable d-o-d.

Turkiye: US-origin HMS (80:20) bulk prices were assessed at $384/t CFR Turkiye, up by $2/t d-o-d.

Outlook

Looking ahead, we may anticipate a potential increase in scrap prices. The domestic European market is showing an upward momentum, with less suppliers inclined towards exports. Any rise in crude oil prices could lead to an increase in freight costs. Moreover, primary mills are considering a price hike in rebar, adding to the overall potential upward movement. In Turkiye, prices may continue to rise in the near term, but any further rally could be limited by sluggish Turkish finished steel sales.