Bangladesh’s major mills remained muted on the back of LC opening issues. Banks have put restrictions on opening any new LC for any non-essential material. Because of the volatility in the currency exchange rate, the government has decided to restrict LCs to only daily necessities.
The national currency remained stable this week. The taka is currently trading at 102.2 to the dollar.
“LC-related issues have been holding back active bulk scrap bookings since last month,” said a major steelmaker.
“Banks have stopped entertaining new LCs,” said another reliable source.
- Indicative offers for Japanese H2 are at $375-380/t CFR levels. However, no fresh bids are heard from the buyers’ side. Meanwhile, buyers are waiting for clearer market directions amid a dull finished steel market.
- Furthermore, US-origin bulk scrap offers are now being quoted at $385-390/t CFR level, moving up significantly by $10/t w-o-w. The prices have increased sharply as Turkish scrap buyers started procurement ahead of the winter holidays.
A Mediterranean region-based Turkish steel mill booked a Baltic-origin bulk scrap cargo, comprising 20,000 t of HMS (80:20) and 10,000 t of bonus, at $366/t and $386/t CFR Turkiye respectively, SteelMint learnt from sources. The cargo has been booked for December shipments.
Container market maintains silence
On the other side of the country’s scrap market, mid-sized mills, which frequently prefer to book containerized material, have been relatively quiet in recent months. Mills based in the Dhaka region are struggling with power outages and gas shortages and are being forced to curtail production for the time being.
“Shortage of gas, limited power supply and high raw material costs are leading to bearish market sentiments,” said a Dhaka-based steelmaker.
- Containerized offers for UK-origin shredded scrap are set at $440/t CFR, largely unchanged w-o-w. A small quantity is heard to have been booked at $435/t CFR levels.
- Meanwhile, containerized UK-origin HMS 1&2 (80:20) are at $415-420/t CFR Chittagong, largely stable w-o-w.
“If the situation remains like this then December would be very tough for Bangladesh as mills have already cut down their production,” highlighted a Bangladeshi source.
Local scrap prices up: Considering the limited availability of domestic material and increased demand, local scrap prices are high. The LC restriction on imported material kept buyers dependent on domestically available material.
Currently, the local scrap is being traded at BDT 61,000/t exy basis, moving up BDT 1,000/t w-o-w.
Domestic market below expectations
The domestic market is slow as rebar demand is very limited. However, prices for finished material are also stable. Nevertheless, the government-funded projects are also halted due to liquidity issues. Despite the prices remaining largely stable, domestic market sentiments are still below expectations, and steelmakers are under pressure to keep their rebar prices on the lower side.
SteelMint-assessed domestic rebar prices are at BDT 89,000-90,000 /t ($876-885/t) exw-Chittagong. However, the secondary mills in Dhaka have kept their rebar offers at BDT 85,000/t ($826/t), unchanged w-o-w.
Outlook: The market is likely to remain gloomy till this year-end, SteelMint understands. The dull domestic situation, unstable currency exchange rates, and power cuts remain the major issues that are likely to keep sentiments negative.
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