Bangladesh: Imported scrap market slows down amid dull domestic sentiments

Bangladesh’s imported scrap market has been volatile in the past one week. However, despite the continued sluggish domestic market sentiments, many major mills are active in booking bulk cargoes. 

The LC restrictions, limited credit availability with banks, unsupportive finished steel demand, and bad weather have impacted market activities severely. Meanwhile, the secondary mills have move to the sidelines, opting to wait and watch for a clearer market direction. 

Containerised scrap offers and deals

• Fresh offers for UK-origin shredded are being quoted at $475-480/t CFR levels, moving down significantly by $10-15/t w-o-w. However, limited deals are happening at lower levels. 
• Meanwhile, UK-origin HMS is now at $465/t CFR Chittagong, unchanged w-o-w. 

Furthermore, secondary mills preferred domestic materials over imported ones due to cost competitiveness. The gap between imported and domestic scrap prices has widened. The local shipbreaking scrap prices are at BDT 54,000-55,000/t basis, whereas, the landed cost for the imported material is at BDT 65,000-70,000/t levels. 

Recent bulk scrap offers

• Indicative offers for US-origin bulk HMS (80:20) were heard at $420-425/t CFR levels, mostly unchanged w-o-w. 
• SteelMint’s assessment for Japanese bulk H2 is at $440/t CFR Chittagong, moving up significantly by $15-20/t CFR levels w-o-w after the Japanese Kanto scrap export tender concluded at higher-than-expected levels last week.

Reasons behind slow demand

• Power outages lead to steel production cuts: The steel industry is struggling due to high input costs and inadequate demand for finished steel. Major mills have cut down their production and are running at 50% capacities whereas mini-mills have suspended production for a while. The government has stopped LNG imports, and the domestic gas reserve is not that sufficient to fulfill the energy demand. 
• Rebar prices firm: Due to high input costs mills raised their rebar offers last week. However, this week, steelmakers kept prices unchanged. SteelMint assessed domestic rebar prices at BDT 85,000/t ($803/t) exw-Chittagong, down by BDT 3,500/t w-o-w. The secondary mills in Dhaka are quoting rebar at BDT 80,000/t ($787/t), down BDT 300 /t w-o-w.

Outlook: Industry experts feel the market may take almost a month to see some improvement in steel demand. The funds crisis is making the market uncertain while high input costs and electricity issues continue to squeeze the margins between raw material and finished steel.