South Asia: Indian scrap buyers active; LC issue weighs on Pakistan, Bangladesh

Indian steel producers remained active in South Asia's imported scrap market, as many fresh bookings have been recorded recently. Other neighbouring countries like Pakistan and Bangladesh have witnessed slow negotiations. Interestingly, Turkish scrap buyers are also active in the market, with a couple of bulk cargoes booked at low levels.

India

Indian steel producers have continued to book imported scrap material at favourable prices. Considering the lack of active participation of other scrap buyers from Pakistan and Bangladesh, Indian mills have taken this advantage to replenish inventory for post-monsoon production. Deals are concluding at $405-410/t levels for the shredded material.

However, heavy rainfall in the northern region of the country, such as in the Mandi market, has led to a downtrend because there was hardly any significant market activity after the flooding.

Pakistan

The ongoing letter of credit (LC) issue and a depreciated national currency (PKR 277 = $1) have kept the economic situation uncertain in Pakistan. Despite lower imported scrap offers, buyers have slowed down negotiations. Furthermore, dull domestic finished steel demand kept market activity slow.

"Production levels from steel mills are at 30-40% or below," said a scrap trader.

Bangladesh

Bangladesh-based steel producers are less active due to slow finished steel demand in the domestic market. Additionally, liquidity issues and LC opening restrictions from banks are keeping steel producers cautious. Meanwhile, steel production is still running at low capacity.

Turkiye

Turkiye's steel producers were active during mid-week, with some deals being recorded. However, some mills are more focused on finished steel sales. In a recent UK deal, Turkish imported ferrous scrap prices dropped by $9/t, hitting the lowest level in calendar year 2023 (CY23). A Mediterranean-based mill secured a cargo, consisting of 22,000 t of HMS (80:20), at $367/t CFR Turkiye for August laycan. According to market sources, prices will continue to drop due to weak steel demand.

Recent deals

• Around 1,000 t of HMS have been booked from Bahrain at $410/t Mundra.
  
  
• Another 1,500 t of shredded have been booked at $405-407/t CFR Mundra.
  
  

Price assessments

• India: UK-origin shredded scrap offers stand at $405/t CFR Nhava Sheva, unchanged d-o-d.
  
  
• Pakistan: UK-origin shredded scrap offers are at $410/t CFR Qasim, unchanged d-o-d.
  
  
• Bangladesh: Offers for UK-origin shredded scrap were at $440/t CFR Chattogram, unchanged d-o-d.
  
  
• Turkey: US-origin HMS 1&2 (80:20) prices stood at $372/t CFR Turkiye, down $4/t d-o-d.
  
  

Outlook

South Asia's imported scrap market remains uncertain. The ongoing LC and liquidity problems in Pakistan and Bangladesh are likely to keep demand subdued in these countries. However, Indian steel producers are expected to continue to be active in the market, as they look to replenish inventory ahead of the post-monsoon season. Overall, the market is expected to remain volatile in the near term.