Bangladesh: Ferrous scrap import shipments touch over 4 mnt in January-September, 2022

Imported scrap volumes into Bangladesh, a major ferrous scrap buyer in South Asia, reached 4.13 million tonnes (mnt) in the first nine months of CY’22 vis-a-vis 3.15 mnt in the same period last year. Total imports of scrap rose by 31% on a yearly basis.

The county’s steel market observed bearish sentiments amidst lower finished steel offtake on liquidity issues and subdued demand from end users in CY’21.

Bulk scrap imports rebounded in the first nine months of 2022 by 54% to 2.81 mnt from 1.83 mnt in the corresponding period last year, as per SteelMint’s vessel data, which further shows that imports from the US, UK, and the Netherlands remained high. However, export volumes from Japan were lower.

Factors behind higher scrap imports

• Buyers avoid Japanese material: Bangladeshi buyers held back from importing Japanese scrap in CY’21, as Japanese suppliers had to cater to their domestic market due to strong demand, with the country’s economy reviving post-Covid lockdowns amid better prices alongside discrepancies in bids and offers in the export market. Bangladeshi buyers, as a result, started sourcing bulk scrap more from the US and UK.

Exports from Japan were recorded at 230,000 t in January-September 2022 compared to 370,000 t in the same period last year.

• Volatility in freight rates: A significant rise was seen in freight rates last year due to the container shortage amidst the impact of the Covid-19 pandemic, which increased further this year due to the Russia-Ukraine war. Later, freight rates came down and also container availability eased. Interestingly, the bulk freights are cheaper by $30-40/t compared to container.
• Increasing steel demand for govt-funded projects: Steel demand in Bangladesh may remain supported mainly due to the government-funded infrastructure projects which were launched to stimulate the economy hit by Covid-19.
• Development of port facilities: Due to inadequate port facilities earlier in the country, large ships were unable to enter Chittagong Port. But the Bangladeshi government is working on projects such as the Matarbari Deep Seaport, which is estimated to be completed by 2026. Hence, buyers may get material delivered on time.

Price trend

As per SteelMint data, the average offers from the US in January-September were at $525/t, whereas average prices of Japan-origin bulk H2 material stood at $535/t CFR Bangladesh during the period under review.

Outlook
As Bangladesh is focussed on infrastructural development, it is expected that imports of ferrous scrap may go up further. Also, the country is enhancing its crude steel capacity from the current 9 mnt to around 13 mnt by 2025, as per SteelMint data. So, this implies further increase in consumption of ferrous scrap in the coming time.