At least two mills have been shopping around the market for bulk cargoes this week, Fastmarkets understands, with offer prices from both Japan and the United States at higher levels than last week.
Sellers in the US West Coast have largely left the market and are no longer making firm offers to Bangladesh, although on August 26 one South Asian trader said that $315 per tonne cfr Bangladesh for HMS 1&2 (80:20) in bulk may be sufficient for sellers.
Buyers active in the market are willing to pay $310-315 per tonne cfr for HMS 1&2 (80:20) for fresh bookings, and although there is a gap between bids and offers, at least one mill has an immediate need to buy cargoes, sources said.
Fastmarkets’ price assessment for bulk cargoes of steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr Bangladesh was $308-315 per tonne on Thursday, up from $307-310 per tonne one week before.
Bangladesh mills have been on a hot streak over the past month, with six US-origin bulk cargoes believed to have been booked by three different mills since the start of August.
Demand stays strong
Though no new US bookings were heard over the past week, market sentiment remained strong given the solid levels of demand in the Bangladeshi steel market, sources said.
“The market is good. Though the coronavirus is still around, the government is ignoring the situation because of the economy,” a Bangladeshi steelmaker source told Fastmarkets. “Nothing has been happening in the last three to four months, but some government construction projects are starting again,” he added.
But a second mill source said that although he recognized that US sellers wanted to increase prices, he believes the local market is “not supporting” such an increase.
Stronger steel demand has led to all three of Bangladesh’s largest mills raising their capacity utilization rates in the last two months, sources told Fastmarkets.
Scrap prices to Bangladesh also increased on a lack of supply to the market, sources said.
“The US isn’t really offering scrap to the export market at all,” the South Asian trader said.
“The US domestic market is strong. Sellers are trying to raise export prices because the domestic market is expected to rise by $15-20 per tonne," an exporter source said.
“There's not much imported scrap on offer to Bangladesh at the moment - most deals are for cut grades in containers from Latin America,” he said.
One sale was heard made for 2,000 tonnes of HMS 1 in containers from Brazil at $312 per tonne cfr Bangladesh, with South Africa material heard sold at the same price.
Meanwhile, 4,000 tonnes of shredded scrap from Brazil was sold at $315 per tonne cfr Bangladesh around a week back, with South African plate and structural (P&S) scrap fetching $323 per tonne cfr.
One rumored deal was also heard from Japan for H2 in bulk at $303 per tonne cfr Bangladesh this week, while a bid for Japanese shredded in bulk was heard at $325 per tonne cfr.
UK tests the water
One of the big talking points among market participants in the past week was the rare news of UK bulk scrap offers to Bangladesh.
UK exporters can usually only make deals to Bangladesh workable at times when Turkey is out of the market and the Bangladesh price is high enough to justify the hefty freight costs.
This has been the case in the last three weeks with Turkish mills taking a break from the market, but after Turkish mills returned to buying this week - at higher prices - the situation changed again, sources said.
“The UK can only sell to Bangladesh if Turkey is quiet, but with Turkey coming back, it is not workable,” the South Asian trader said.
The journey from Liverpool, England to Turkey’s Izmir port is 2,907 nautical miles, costing around $15 per tonne in freight for a 30,000-tonne cargo, as of mid-August, Fastmarkets understands.
By contrast, the voyage to Bangladesh’s Chattogram port is 7,918 nautical miles and costs around $50 per tonne, Fastmarkets heard. UK freight rates to Bangladesh are also currently around $10 higher than those from the US West Coast to Bangladesh.
Therefore, to be workable to a UK seller, Bangladesh must be willing to pay $35-40 per tonne more than Turkey.
Fastmarkets’ daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey was calculated at $280.15 per tonne on August 26.
The UK was heard to have offered a mixed cargo of HMS 1&2 and shredded scrap to Bangladesh at $320 per tonne cfr at the beginning of the week, but by Thursday the only price available ballooned up to $334 per tonne cfr for HMS 1&2 and $339 per tonne cfr for shredded, Fastmarkets heard.
The business of selling in bulk to the UK is also logistically difficult, the exporter source said.
UK cargoes to Bangladesh need to be bigger to make freight costs more workable, around 40,000-42,000 tonnes and must have more cut grades. Together with the low discharge rate for cut scrap at Chattogram port, this is a lethal cocktail and would incur significant demurrage costs, he said.
“Exporters don’t want their cargo anchored and have to get buyers to give money for demurrage fees,” he said.
Prices for bulk cargoes of scrap imported to Bangladesh moved up again over the last week with offer prices from key exporters on the rise, market participants told Fastmarkets.