Bangladesh: Imported scrap market subdued on dull finished steel demand

Due to sluggish finished steel demand, Bangladesh’s imported scrap market remained subdued. Due to the LC opening restriction, market activity is yet to resume in a full-fledged manner. Buyers and steelmakers have opted to wait and watch for a clearer market picture and for improvement in finished steel demand.

The gas and power crises have led to deterioration in the overall situation after the government stopped buying natural gas from overseas markets because of the depletion of foreign currency reserves.

Steel mills have put their production on hold, additionally, other government investment projects are also on hold in Bangladesh owing to the devaluation of the national currency. The energy crisis, escalated cost of production, and the deep uncertainty caused by the Russia-Ukraine war are weighing on the market.

• Containerized offers for UK-origin shredded scrap start at $440-445/t CFR, moving down significantly by $10-15/t w-o-w. However, prices started moving up on d-o-d basis. 
• Meanwhile, containerized UK-origin HMS is now trading at $415/t CFR Chittagong, up by $5/t week over week.

“Market situation is very bad due to LC opening restriction on tight foreign reserve situation”, stated a large scrap trader.Customers have demand but are struggling for LC opening, he added.

However, imported scrap prices are likely to increase after the recent Turkish deals. Market experts believe that this hike will be temporary and will go down again due to the absence of buyers.

Bulk buyers mostly silent

• Indicative offers for Japanese-origin bulk H2 were heard at $370–375/t CFR, down by around $35/t w-o-w.
• Meanwhile, US-origin bulk HMS (80:20) were at $370-375/t CFR levels, moving down significantly by $10-12/t w-o-w.  

Market Scenario-

• BDT falls further: The national currency continued to fall further. The taka is currently trading at 102.6 to the dollar. Apart from the volatility in the global economy, the higher inflationary environment is also causing slow down in new project investments.
• LC opening restrictions: Similarly, the restriction in opening of new LCs for imported material and industrial raw materials has impacted the steel production.
• Power tariff hike will add to woes: The increased power tariff has raised concerns among steelmakers, who say consumers may soon have to bear the added burden.

Rebar prices slightly up

SteelMint assessed domestic rebar prices at BDT 90,500/t ($887/t) exw-Chittagong, moving up by BDT 2,000/t w-o-w. However, the secondary mills in Dhaka have increased their rebar offers at BDT 85,000/t ($826/t), unchnaged w-o-w. Major construction activities are yet to pick up except for governmental projects.

Outlook: Despite the fact that the winter season has begun, the market will remain bearish until January, SteelMint learnt from sources. Secondary steelmakers are using domestic material. Because of the lack of acceptance from buyers’ end, some suppliers are hesitant to quote any offers.