The price paid for scrap imported to the South Asian country continued to mount over the last week with supply tightened on both rising international scrap demand and soaring ocean freight costs, Fastmarkets heard.
“Bangladeshi buyers have been caught on the wrong foot. Some smaller containerized scrap buyers stayed away from the import market but now shipbreaking prices have increased and there’s not much local scrap,” an exporter source said.
“Suddenly, there is a flurry of import bookings in containers from these mills,” he said.
“Whoever needs the material will buy right now,” a Bangladeshi steelmaker source said, adding that he still hoped prices would start to fall soon.
This upward momentum is evident in the shredded scrap market, where some small volumes from Europe were heard to have broken the $400-per-tonne ceiling and sold at $405 per tonne cfr Bangladesh over the last week. Offers from Australia were heard at $400 per tonne cfr, sources said.
Fastmarkets’ price assessment for steel scrap, shredded, containerized, import, cfr Bangladesh was $400-405 per tonne on Thursday, up $25 per tonne from $375-380 per tonne the week before.
Offers for HMS 1&2 (80:20) in containers from Europe were heard as high as $390 per tonne cfr Bangladesh but the mill source said he would not pay higher than $380 per tonne cfr.
Fastmarkets’ price assessment for steel scrap, HMS 1&2 (80:20), containerized, import, cfr Bangladesh was $380-385 per tonne cfr on December 3, up $20-30 per tonne from $350-365 per tonne cfr one week earlier.
The higher freight costs in recent weeks have also inflated containerized scrap prices, with market participants telling Fastmarkets that many exporters do not have allocations of containers for December shipment and therefore are unable to honor existing contracts or make fresh offers.
Larger mills may also struggle
Larger steelmakers in Bangladesh may be better stocked than their smaller competitors but their higher melt rate means they too may soon have to return to the market for expensive scrap, Fastmarkets understands.
Furthermore, finished steel demand and prices in the country continue to be muted, which is hurting steelmaking margins.
“Some bigger Bangladeshi mills stocked up on scrap inventory thinking they could weather the storm and come back in at lower prices,” a South Asian trader said.
“One major mill keeps a three-month buffer of steelmaking raw materials including scrap and if they don’t buy for a month, then 100,000 tonnes is gone. Now they are already halfway through that buffer,” the trader added.
To avoid dealing with container freight problems, some Bangladeshi mills are looking instead to the bulk import market to get material but they are also being greeted with very high prices in that market.
UK-origin steel scrap was heard offered at $395 per tonne cfr Bangladesh for HMS 1&2 (80:20) earlier this week, while a cargo of HMS 1&2 (80:20) and shredded scrap was offered at an average price of $402 per tonne cfr.
Fastmarkets’ price assessment for bulk cargoes of steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr Bangladesh was $390-395 per tonne on Thursday, up from $365-373 per tonne a week earlier.
Fastmarkets’ price assessment for bulk cargoes of steel scrap, shredded, deep-sea origin, import, cfr Bangladesh was $395-400 per tonne on Thursday, up from $370-378 per tonne last week.
Small and medium-sized steel mills in Bangladesh have been forced to re-enter the market for scrap at high prices, market participants said on Thursday December 3.