South Asia: Imported ferrous scrap prices witness mixed trends
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The South Asian imported ferrous scrap market showed a mixed trend today owing to varying market conditions witnessed in the region. In India, demand for imported scrap remained subdued due to bid-offer disparities and a weak steel market, with steel mills opting for cost-effective sponge iron instead. Pakistan's domestic steel market faced sluggish rebar demand and rising production costs, causing many mills to operate at reduced capacities. In Bangladesh, recent student protests and civil unrest severely have disrupted the steel market leading to supply chain delays and financial transaction issues.
Overview
India: In India, demand for imported scrap remained subdued due to bid-offer disparities and an unsupportive steel market. Steel mills have shifted their preference to sponge iron over scrap due to cost-effectiveness. A major steel mill in north India, which previously used 5% sponge iron, has increased its usage to 10% to adjust production costs. They have also reduced their production capacity to 90% due to the sluggish domestic steel market, BigMint learned from sources.
Indicative offers for shredded scrap from the US and UK/Europe were at $410-415/t CFR Nhava Sheva, with some suppliers quoting $425-430/t CFR. However, no firm bids were heard today.
HMS (80:20) offers from the UK/Europe and West Africa were assessed at $385-390/t CFR.
An overseas supplier noted: "In north India, sponge iron usage was approximately 35%, while in the south it ranged between 30-35%. Both regions had been experiencing weaker steel sales. This shift helped steelmakers manage costs amidst rising freights and delays in scrap deliveries. They expect conditions to improve by mid-August if demand revives."
Pakistan: Pakistan's domestic steel market remained slow due to weak demand for rebar. Some steel mills reported reduced margins due to increased electricity and gas tariffs, resulting in higher production costs. Consequently, many medium-sized steel mills are operating at 50-60% capacity, while larger mills are at 30-40%.
Buying interest for imported scrap remained limited and is based on necessity. Indicative offers for shredded scrap from the UK/Europe are around $425-430/t CFR Qasim.
As per local reports, in Pakistan, protests erupted near the capital due to a sharp hike in electricity tariffs, which rose by 26% in the last fiscal year and an additional 20% on 13 July. The increase was necessary to meet IMF loan conditions, leading to power bills doubling for some residents. Protesters, led by the Islamist Jamaat-e-Islami party, are demanding the government withdraw new taxes on electricity to mitigate the price surge.
Additionally, the State Bank of Pakistan recently lowered the policy rate by 100 bps to 19.5% from 20.5%.
Bangladesh: Bangladeshi buyers have not fully resumed work following violent student protests, resulting in civil unrest and loss of cell reception for the last 8-10 days.
According to local reports, the economic disruptions in Bangladesh, including widespread shutdowns and violence, are significantly impacting the steel market. The turmoil has caused delays and disruptions in the supply chain, affecting steel production and distribution. Additionally, the internet blackout and curfews have hindered business operations and financial transactions, leading to a slowdown in construction projects and industrial activities that heavily rely on steel. This has increased the economic burden on the steel sector, exacerbating the challenges faced by local manufacturers and importers in maintaining their operations and meeting demand.
Indicative offers for shredded scrap from the UK/Europe were assessed at $425-430/t CFR Chattogram, while HMS (80:20) were at $405-410/t CFR.
Price assessments
India: UK-origin shredded scrap indicatives were assessed unchanged at $416/t CFR Nhava Sheva, compared to last closing on Friday.
Pakistan: UK-origin shredded indicatives were assessed at $429/t CFR Qasim, up by $1/t compared to last closing.
Bangladesh: UK-origin shredded prices were assessed at $428/t CFR Chattogram, up by $2/t compared to last closing on Friday.
Turkiye: US-origin HMS (80:20) bulk prices were assessed unchanged at $388/t CFR Turkiye, compared to last closing on Friday.
