South Asian ferrous scrap index witnesses bearish market on uncertainty, cautious activity

The South Asian ferrous scrap index was marked by uncertainty and cautious activity today. In India, discrepancies between bids and offers have led to limited interest in imported scrap, with buyers favouring domestic materials. Pakistan faced a similar slowdown, driven by cash flow challenges and rising costs, causing buyers to hold back. Meanwhile, Bangladesh saw an uptick in bulk scrap imports in July, though current buyer activity remained subdued. Turkiye, on the other hand, experienced a notable decline in scrap prices, with market participants facing mixed signals from European and US sellers.

Overview

India: Indian buyers have shown little interest in booking imported scrap due to the ongoing discrepancies between bids and offers. However, recent market developments reveal that several distressed container sales have been concluded for shredded scrap, scheduled to arrive in August, at levels of $390-395/t in the northern region. Despite this, most buyers are still opting for domestic scrap and sponge iron over imported materials.

A buyer from northern India commented, "There's hardly any work happening, with production levels around 50-60%, relying 25% on sponge iron. The scrap deficit is around 5-10%, but since production is down, it's not having a significant impact. Panic sales continue."

Indicative offers for shredded scrap from the UK/Europe were assessed at $410-415/t CFR Nhava Sheva, a few suppliers were also quoting above $420/t CFR levels. However, there were no takers. HMS (80:20) offers were at $380-385/t CFR.

Pakistan: Pakistan's imported ferrous scrap faced limited demand due to cash flow crunch and a seasonal slowdown, which has reduced profitability and, consequently, production levels. Distress sales were taking place. Offers for shredded scrap from the UK/Europe ranged between $418-425/t CFR Qasim and $415/t for US-origin scrap, but buyers are holding back, anticipating a further drop in prices.

A steel mill official said, "The market is struggling, with production levels down to 60%, no demand, and lack of new government projects. Additionally, operational costs are rising, with electricity costs increasing by PKR 3,000-4,000 monthly, significantly impacting the industry."

Bangladesh: Bangladeshi buyers remained inactive today, with no firm bids or offers reported. However, a market participant noted that last month, approximately 30,000-40,000 t of containerised scrap were imported into Bangladesh, though this figure is yet to be confirmed.

According to BigMint's bulk vessel line-up data, Bangladesh, a key importer of bulk scrap in South Asia, saw a rise in its bulk ferrous scrap imports in July 2024. The country imported a total of 396,639 t, marking a 14% increase from the previous month's 347,268 t. This growth also represents an 8% y-o-y increase compared to July 2023's import volume of 367,769 t.

Market activities are expected to pick up in the coming days as an interim government is anticipated to be formed this week, which could restore business activity to normal levels by the end of this week or early next week.

Turkiye: The Turkish imported ferrous scrap market experienced a significant decline, with prices dropping despite steady collection costs in Europe and a stronger euro. Offers for US-origin bulk HMS (80:20) was assessed at $381/t CFR, down by $6/t from the previous day. A Marmara mill reportedly secured an EU-origin deal at $376/t CFR for HMS (80:20), although many in the market felt this price might not be sustainable due to high collection costs in Europe. However, similar prices were still considered repeatable by other sources. The Baltic region also saw aggressive offers, while the US market remained relatively stable with some downward pressure. Overall, the market faced mixed signals, with European recyclers under pressure but still managing to push deals through.

Price assessments

India: UK-origin shredded scrap indicatives were assessed at $415/t CFR Nhava Sheva, down by $2/t d-o-d.

Pakistan: UK-origin shredded indicatives were assessed at $420/t CFR Qasim, down by $6/t d-o-d.

Turkiye: US-origin HMS (80:20) bulk prices were assessed at $381/t CFR Turkiye, down by $6/t d-o-d.