Bangladesh: Imported scrap trades subdued despite drop in offers

The imported scrap market in Bangladesh remained subdued for yet another week despite offers continued their downtrend. The negative domestic market sentiments, lower operational capacities LC restrictions, and liquidity crunch in the country, mills are facing issues to maintain cash flow.

Recent bulk scrap deals and offers

• However, in a recent deal, a major mill was heard to have booked bulk US origin 32,000 t HMS 1&2 (80:20) cargo at $410/t CFR levels.
• Indicative offers for the US-origin bulk HMS (80:20) were heard at $410-420/t CFR levels, down by $5-10/t w-o-w.
• Price indications for Japanese bulk H2 is at $425-430/t CFR levels, inching down by $10-15/t w-o-w.

Containerised scrap offers and deals

• New offers for the UK-origin shredded are being quoted at $460-470/t CFR levels, moving down significantly by $10-15/t w-o-w. Deals largely remained absent throughout the week.
• Meanwhile, the UK-origin HMS is now heard at $440-445/t CFR Chittagong, down by $10-15/t w-o-w.

Secondary mills preferred domestic materials over imported ones due to cost competitiveness. Domestic prices slightly came down further on the back of less buying interest. The local shipbreaking scrap prices are at BDT 52,000-53,000/t, down by BDT 1,000-2,000/t w-o-w.

Reasons behind subdued market

• Liquidity issues: Mills are struggling to maintain cash flow due to liquidity crunch all over the country. Due to less consumption of finished steel material, market activities have slowed down. 
•  Power cuts: Due to power cut issues, 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 rebars offers last week. SteelMint assessed domestic rebars prices at BDT 83,000-85,000/t ($819-839/t) exw-Chittagong. The secondary mills in Dhaka are quoting rebars at BDT 78,000-80,000/t ($770-780/t), down BDT 700/t w-o-w. Thus, it seems that finished steel prices have largely bottomed out and hence, mills may return for bulk scrap purchases soon on price support.