After hectic activity in March and April, the Bangladeshi import market for bulk cargoes has cooled significantly so far in May, with high scrap inventories in the country combining with a downturn in activity with the start of the Islamic holy month of Ramadan.
Offer prices for deep-sea bulk cargoes to Bangladesh increased after South Korea booked an Australian scrap cargo at $255 per tonne cfr for HMS 1&2 late on Tuesday. That followed a renewed increase in Turkish import scrap prices on Monday.
Two Bangladeshi bulk-buyer mills were inquiring about bulk prices in recent days with a view to a possible deal, while two other large mills remained on the market sidelines due to bloated stocks, sources told Fastmarkets.
Fastmarkets’ price assessment for bulk cargoes of steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr Bangladesh, was $265-275 per tonne on May 14, up by $10 per tonne from $255-265 per tonne last week.
Fresh bulk offer prices were heard at $275-280 per tonne cfr for US West Coast-origin HMS 1&2 (80:20), while bids were heard at $260-265 per tonne cfr.
Although no bulk deals were closed, containers of Brazil-origin HMS 1&2 (80:20) were sold at $250-255 per tonne cfr Chattogram, with shredded scrap sold at $275-280 per tonne cfr. That was up by $5 per tonne compared with the available prices for Brazilian HMS 1&2 (80:20) last week.
One South Asian trader said that it may be difficult to close deals in the Bangladeshi market in the current environment of Covid-19 pandemic precautions.
“The country is still under lockdown - though it is not as severe as in India - so demand for scrap might be a bit slow at the moment,” he said.
Bangladesh’s government announced on Thursday that it will extend the lockdown in the country by a further fortnight until May 30. Despite that, Fastmarkets understands that steel output has recovered in recent weeks after several mills slashed capacity utilization rates in April.
“Bangladesh is lacking demand currently, and cheap ship scrap is available locally,” a second South Asian trader said.
Ship recycling yards in Bangladesh restarted operations earlier in May after being closed due to Covid-19, according to shipbroker Compass Marine.
“Beaching permissions are being issued on a case-by-case basis for the vessels that have been held in quarantine at the anchorage,” the brokerage firm said.
A third South Asian trader said that shipyards in the country often hoard material and wait for import prices to rise before offering tonnages to the mills, but that mills also tended to bid-up local scrap prices in an attempt to make costs too high for their competitors.
Bangladesh scrapped 234 ships in 2019, according to the NGO Shipbreaking Platform.
The second trading source predicted that international scrap prices would continue to rise over the coming month, with more countries exiting their Covid-19 lockdowns, but the third trader disagreed.
“There is a slight uptick with Turkey having come in hot, but I don’t think the bull run will continue for long,” he said.
“Mills are the ones that usually make the highest margins. Mills are losing money, and that rarely happens – it is like betting against the house in a casino,” he added.
Over May 1-13, the average margin between the prices for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, and steel reinforcing bar (rebar), export, fob main port Turkey, was just $137 per tonne.
That was down sharply compared with the long-term average margin of $177 per tonne.
Offer prices for bulk ferrous scrap cargoes to Bangladesh have increased over the past week after higher prices were paid elsewhere in Asia, but several buyers remained out of the market, sources told Fastmarkets on Thursday May 14.