Bangladesh: Imported scrap trades remain subdued on liquidity concerns

Steel mills in Bangladesh continue to remain cautious over scrap purchases on LC opening restrictions from banks. Meanwhile, limited demand for finished steel downstream has slowed down market activities. 

Furthermore, mills are running with 50% production capacity on poor demand, power cuts, and insufficient liquidity. The ongoing cash crisis is likely to keep buyers away from the market.

Also, mills seem to have to hold scrap inventories as Bangladesh’s bulk ferrous scrap imports increased by 44% to 581,094 t in October compared to 402,798 t in September, as per customs data.

The US was the top exporter at 317,680 t, followed by the Netherlands and Japan at 103,676 t and 78,064 t, respectively. Scrap imports witnessed an aggressive rise of 153% y-o-y as against 229,646 t in October 2021.

Bulk scrap offers 

• Indicative offers for US-origin bulk HMS (80:20) were heard at $390-400/t CFR, down $10-20/t w-o-w. Buyers’ bids stood at around $370-380/t. However, deals are yet to be heard. 
• Price indications for Japanese bulk H2 are at $425-430/t CFR, unchanged w-o-w. However, buyers are not showing much interest for Japanese material due to the price disparity with US scrap. 

On the other hand, Japan’s scrap demand has increased significantly as the mills are strictly adhering to decarbonisation parameters. Hence, Japanese scrap prices to destinations such as Vietnam and South Korea have increased considerably. 

Containerised scrap offers

• New offers for UK-origin shredded are at $460/t CFR, down $5/t w-o-w. Limited deals were heard to have been concluded, while the mini-mills seem to be waiting for a clearer market picture. 
• Meanwhile, UK-origin HMS is now heard at $430-440/t CFR Chittagong, down $5-10/t w-o-w.

As many banks were unable to clear import payments on time, the Bangladesh bank asked them to clear the bills on time. Banks have put restriction on opening of new LCs.  

Rebar prices move up: SteelMint assessed domestic rebar prices at BDT 88,000-89,000/t ($834-874/t) exw-Chittagong. The secondary mills in Dhaka are quoting rebar at BDT 80,000-82,000/t ($780-804/t). Finished steel prices continue to up on increased input costs. 

Outlook: Imported scrap demand is likely to increase during the winter, but is likely to be lower than in previous years. Many household construction projects have stopped due to the liquidity issue, but government-funded projects may resume during the winter season, SteelMint learnt from sources.