Suppliers in Australia and on the United States West Coast once again raised their offers to Bangladeshi mills over the week due to a tightening of supply, with lower industrial activity caused by the Covid-19 pandemic drying up yard inflows.
Unlike in other key Asian markets where mills are struggling with low steel demand, such as South Korea and Vietnam, Bangladesh’s two largest steelmakers are being supported by healthy order books of government-led infrastructure projects, sources in the country told Fastmarkets.
Therefore, like in Turkey where several mills still require scrap, Bangladeshi mills are contemplating paying the higher prices demanded by scrap suppliers.
Fastmarkets’ price assessment for bulk cargoes of steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr Bangladesh was $275-280 per tonne on Thursday, up by $25 per tonne from $250-255 per tonne one week earlier.
“We are supplying a number of government infrastructure projects that are still working despite the current [Covid-19] situation such as railways and a nuclear power plant,” one mill source told Fastmarkets.
Although he had not entered the market for deep-sea scrap this week, the mill source said that should heavy melting scrap (HMS) 1&2 (80:20) from the US West Coast be available at $275 per tonne cfr Chittagong, it would be an acceptable price for Bangladeshi mills given recent transaction prices in Turkey, which rose to almost $260 per tonne cfr for US scrap.
Bids from Bangladeshi mills rose to $260 per tonne cfr for HMS 1&2 (80:20) this week from around $250 per tonne cfr last week.
But offers rose by $20-30 per tonne to $275-290 per tonne cfr this week from $255-260 per tonne cfr last week, sources told Fastmarkets.
Lockdown bites smaller mills
For containerized cargoes, one deal for Australia-origin HMS 1&2 (80:20) was heard at $255 per tonne cfr Chittagong, while HMS 1 from Chile was sold at $250 per tonne cfr. Plate and structural scrap (P&S) from Australia changed hands at $260-270 per tonne cfr.
“Suppliers don't have material and so prices keep rising,” a second mill source said. "But on the other hand, in Bangladesh, everything is locked down. We now only have one furnace that is operating."
Bangladesh entered a nationwide lockdown on March 24, and in recent weeks, traders have reported difficulties dealing with contracts and letters of credit (LCs) in the country due to the closure of banks in the capital Dhaka and the port city of Chittagong.
Another consequence of these problems is that some induction furnace mills in Dhaka are unable to source direct-reduced iron (DRI) from India in the current climate because they would have to carry these transactions out using LCs as is typical, one South Asian trader told Fastmarkets.
“DRI sellers in India are not taking new orders from Bangladesh so some of those induction furnaces are very short on material now,” he said.
He added that the lockdown in the country has also disproportionately affected these smaller mills that have either few or no government supply contracts and who also rely on cross-border steel trade with buyers in eastern Indian states that are also under lockdown.
Import prices for bulk cargoes of deep-sea ferrous scrap in Bangladesh rose by $25 per tonne over the week to Thursday April 16 amid low availability.