South Asia: Indian scrap market shows signs of recovery fuelled by uptrend in domestic semis, steel

• Sluggish demand persists in Pakistan, Bangladesh markets
  
  
• Turkish prices see slight hike, with further increase expected
  
  
• Near-term outlook positive on Chinese stimulus announcement
  
  

The imported scrap markets in South Asia remained subdued, with sluggish demand across India, Pakistan, and Bangladesh due to slow construction activities and economic pressures.

While India's market showed signs of slight improvement after months of stagnation, Pakistan and Bangladesh continued to face challenges from weak steel sales, cash flow constraints, and seasonal factors such as monsoon floods.

Offers for various grades of scrap rose slightly, but a mismatch between buyer expectations and seller offers persisted. Meanwhile, the Turkish market witnessed a marginal uptick, hinting at potential price rises ahead.

Overview

India on rebound path amid rising billet, ingot prices: India's imported scrap market is beginning to show signs of recovery after two months of stagnation, with increasing offers, though actual transactions remain limited. While buyers are expressing interest in HMS grades, demand for shredded scrap continues to lag, according to insights from market players.

Offers for South African and American hand-loaded HMS were at $380-390/t CFR Nhava Sheva, while bids were lower at $365/t CFR. UK-origin PNS was available at $400-405/t CFR, and shredded scrap from the UK, EU, and US was priced at $380-390/t CFR. However, a notable mismatch persists between buyer expectations and seller offers.

A trader observed, "The market in India has been positive over the past two days, driven by improving billet and ingot prices. Buyers are showing interest in HMS grades, although there is still a mismatch in shredded scrap demand. Due to the lengthy 50-day clearing period for direct payment (DP) in India, suppliers prefer selling to Pakistan, where payments through letters of credit (LC) are processed much faster, typically within 15 days."

Downturn in domestic steel weighs on Pakistani scrap market: Pakistan's demand for imported scrap remained sluggish due to weak steel sales in the domestic market, driven by slow construction activities and cash flow challenges. Indicative offers for shredded scrap hovered at around $390/t CFR Qasim.

An India-based trader noted, "Pakistani buyers are comparatively more active in purchasing shredded scrap than Indian buyers, but the pace remains slow due to a downturn in the domestic steel market. Over the past 4-5 days, we sold about 2,000-3,000 t of UK/Europe-origin shredded scrap at around $388-392/t CFR Qasim. Suppliers prefer selling to Pakistan, as payments are made through LCs, which are processed much faster than the direct or cash against documents (CAD) payments used by Indian buyers, which take longer to clear."

Inclement weather plays spoilsport in Bangladesh: The Bangladesh imported scrap market remained sluggish today, primarily due to the rainy season and ongoing floods, which have slowed construction activities and government projects.

Small volumes of Australian and Brazilian HMS were purchased, but supply remains limited, especially for higher-grade material.

A trader revealed, "Buyers were seeking Australian HMS at $370-375/t and shredded scrap at $390-395/t from New Zealand/Australia, but suppliers are scarce."

Rebar prices remained range-bound, at BDT 82000-83,000/t in Dhaka and BDT 87,000-88,000/t in Chattogram, while local HMS was traded at BDT 52,000-54000/t. The floods have severely impacted demand, delaying economic recovery and stalling the steel market.

Turkiye sees price hikes on favourable scrap-rebar margins: The Turkish imported scrap market saw a slight price increase today, driven by a new US-origin deal at $368/t CFR for HMS (80:20). A larger gap emerged between US- and EU-origin material, with the latter trading at $357/t CFR.

Market participants expect scrap prices to rise further, supported by strong rebar demand, but some found the lower EU offers workable for large volumes. Despite mixed views, overall sentiment leaned toward potential price hikes, reflecting favourable scrap-rebar margins.

Price assessments

India: UK-origin shredded scrap indicatives edged up by $2/t d-o-d to $390/t CFR Nhava Sheva.

Pakistan: UK-origin shredded indicatives remained unchanged d-o-d at $390/t CFR Qasim.

Bangladesh: UK-origin shredded prices were at $400/t CFR Chattogram, down by $5/t d-o-d.

Turkiye: US-origin HMS (80:20) bulk prices stood at $368/t CFR Turkiye, up by $3/t d-o-d.

Outlook

The near-term outlook for the South Asian scrap markets looks positive, fuelled by China's substantial economic stimulus aimed at boosting growth and addressing deflation. This is expected to increase demand for scrap as industrial activities ramp up. Additionally, rising rebar prices in Turkiye indicate stronger demand for scrap, while Indian mills are also raising offers, contributing to optimistic market sentiment.