Bangladeshi steel mills are raising finished long steel prices. At the same time, they are trying to increase their conversion spread to meet their higher operational costs.
SteelMint assessed domestic rebar prices at BDT 96,000/t ($898/t) exw-Chittagong, up by BDT 1,000/t. Following suit, mills in Dhaka increased their rebar offers by BDT 1,000-2,000/t w-o-w. Fresh offers are now at BDT 91,000-92,000/t ($851-859/t).
Nonetheless, local ship-breaking scrap prices in the country increased by BDT 1,000/t w-o-w to BDT 68,000-70,000/t ($635-654/t) ex-yard Chittagong.
Reasons for raising prices
1) Mills are facing challenges in the form of a liquidity crunch, power outages, and currency devaluation, factors which are forcing them to raise finished longs prices.
2) Meanwhile, with imported ferrous scrap offers having climbed up, they are going slow in procuring the same.
On the other hand, there is pressure to maintain liquidity in the market as the entire money rotation cycle between stockists and distributors has been disrupted or delayed because of the challenges already mentioned above which has led to slow offtake in bars and rods. This has further disadvantaged mills and necessitated a price hike.
“Lower production volumes made it difficult for mills to pay back debts, or pay electricity bills, and wages to employees. As a result, steel and cement-based mills requested government help to remain competitive,” said a Bangladesh-based steel manufacturer.
Need-based ferrous scrap buying; offers up
The easing in LC openings allowed big purchasers to obtain adequate quantities of scrap for their current requirements.In tandem,prices of ferrous scrap imported into Bangladesh increased w-o-w. Major mills in the country have lately closed a few transactions that have been reported from the US, UK, and Europe.
Unfortunately, there are still financial constraints that are holding down the market for imported scrap.
Due to the bid-offer discrepancies, major buyers of bulk ferrous scrap have withdrawn their offers. Also, suppliers are finding other neighbouring countries like South Korea more appealing where demand for bulk scrap has increased.
Containerised scrap offers and deals
- Around 5,000 t of Europe-origin HMS (90:10) and PNS have been booked at $478/t and $498/t respectively CFR Bangladesh.
- Containerised offers for UK-origin shredded scrap are at 490-95/t CFR, largely stable w-o-w.
- Fresh offers for US-origin bulk HMS are heard at $460-465/t CFR Chittagong, up by $2-3/t w-o-w.
- H2 bulk prices from Japan are at 450-53/t CFR, down by $2/t w-o-w.
Outlook
Market participants expect volatility in ferrous scrap prices as the domestic steel market looks unpredictable currently.
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