South Asian ferrous scrap market displays mixed trends, Indian buyers remain silent

The South Asian ferrous scrap market saw mixed trends today, driven by fluctuating demand and pricing dynamics. In India, buyers showed a preference for domestic scrap due to sluggish steel sales and weak demand for imported material. However, there is optimism for a market rebound as early as October, fuelled by anticipated restocking and infrastructure projects.

In Pakistan, a slowdown in the steel sector and tight cash flows have dampened interest in imported scrap, while Bangladesh continues to face sluggish market conditions due to a bid-offer gap and local economic challenges. Meanwhile, Turkish mills have taken a cautious approach, waiting for clearer signals from China and the US Federal Reserve's rate decision, both of which could shape market trends in the coming months.

Overview

India: Indian buyers have largely refrained from purchasing scrap from the seaborne market, opting instead for more cost-effective domestic alternatives, especially amid sluggish sales of finished steel.

However, there's a growing sense of optimism for a market rebound by early to mid-October, driven by restocking demand in anticipation of the upcoming festival season.

Market participants said that the market is currently in a negative phase and is expected to remain so for the next few weeks. However, a gradual recovery is anticipated in the first or second week of October as the monsoon ends. Additionally, potential US rate cuts could boost liquidity, improving market conditions. Although exchange rates are unlikely to shift, the activation of infrastructure projects should also contribute to a slight uptick in demand and prices by mid-October.

Indicative offers for shredded scrap from the US and the UK/Europe were heard at $385-390/t CFR, while HMS (80:20) offers from UK/Europe ranged between $365-370/t CFR and from West Africa it was heard at $350-360/t depending upon loading.

A supplier commented, "Demand is weak in India, and sponge iron is still cheap, so mills are using 30-50% sponge in their operations. Until the local market prices in India rise by INR 1,000-2,000/t, demand for imported scrap will remain sluggish. Steel demand remains weak, with little hope for improvement in the near term. UK/Europe shredded scrap is only being sold to Pakistan at $390-395/t, while in India, only African HMS is moving at around $350-360/t. Bangladesh is completely out of the market due to LC issues."

Pakistan: Pakistani buyers have shown little interest in imported scrap, citing a slowdown in the domestic steel market, tight cash flows, and squeezed margins. According to market sources, some steel mills have also scaled back production in response to these challenging conditions.

Shredded scrap offers from the UK/Europe were indicated at $390-395/t CFR Qasim.

Bangladesh: Bangladesh's imported scrap market remained sluggish today due to a persistent bid-offer gap and weak demand in the domestic steel market. Offers for shredded scrap from Australia and New Zealand were higher at $400-410/t CFR, while UAE-origin shredded scrap was offered at $385/t CFR, with buyers countering at $370/t. Local scrap prices saw a correction, with HMS at BDT 52,000-53,000/t, and rebar offers in Dhaka at BDT 82,000-83,000/t, and BDT 87,000-88,000/t for Chattogram-based mills. The market outlook is cautious, with limited interest in imports amid ongoing liquidity and construction slowdowns.

Turkiye: Turkish mills showed limited interest in booking new material, awaiting China's response to the US Federal Reserve's interest rate decision. Sellers maintained firm offers due to low availability and high collection costs. Indicative tradable values for US-origin HMS (80:20) were reported at $368-370/t CFR, with prices clustering closer to the higher end. Scrap recyclers are holding firm on prices, expecting a potential rise in October as mills are anticipated to return to the market.

Price assessments

India: UK-origin shredded scrap indicatives rose by $2/t d-o-d to $389/t CFR Nhava Sheva.

Pakistan: UK-origin shredded indicatives remained stable d-o-d to $393/t CFR Qasim.

Bangladesh: UK-origin shredded prices were reported to be stable d-o-d at $400/t CFR Chattogram.

Turkiye: US-origin HMS (80:20) bulk prices remained stable d-o-d at $370/t CFR Turkiye.