Low scrap inventory, together with continuing difficulties in obtaining containers and ballooning shipping rates, led several steelmakers in the South Asian country to inquire for tonnages in bulk.
A Bangladeshi mill booked a 38,000-tonne composite cargo at an average price at $503 per tonne cfr from the United States West Coast in the last week. The cargo was a mix of HMS 1&2 (80:20) and shredded scrap, with the HMS component priced at $500 per tonne cfr Bangladesh.
The same mill also booked a cargo of 22,000 tonnes from a supplier based in Australia and New Zealand, comprising HMS 1&2 (80:20) at $500 per tonne cfr Bangladesh and $505 per tonne cfr for shredded scrap.
Offer prices to the country, which were as high as $520 per tonne cfr Bangladesh for a composite cargo of HMS 1&2 (80:20) and shredded scrap last week, by Thursday had eased to $505 per tonne cfr for HMS 1&2 (80:20).
As a result, Fastmarkets’ price assessment for bulk cargoes of steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr Bangladesh was $500-505 per tonne on Thursday, narrowing down $5 per tonne from $500-510 per tonne cfr one week ago.
Fastmarkets' price assessment for bulk cargoes of steel scrap, shredded, deep-sea origin, import, cfr Bangladesh was $505-510 per tonne on Thursday, down $5-10 per tonne week on week.
Furthermore, a second steelmaker in the country booked a 15,000-tonne Japanese cargo from Kanto Tetsugen this week. The sale price was at ¥44,751 ($431) per tonne fas Tokyo Bay for H2 scrap, up ¥5,779 per tonne month on month compared with December’s auction.
Sources said the cargo sale price was equivalent to $485 per tonne cfr Bangladesh.
Containers hold firm
Prices for containerized imports of steel scrap held largely stable in the last week but market participants believe that prices will begin to drop shortly.
HMS 1&2 (80:20) from Brazil was heard sold at $482 per tonne cfr Bangladesh late last week, while deals from the UK were heard at $482-485 per tonne cfr.
Fastmarkets’ price assessment for steel scrap, HMS 1&2 (80:20), containerized, import, cfr Bangladesh was $475-485 per tonne cfr on January 14, widening up $5 per tonne from $475-480 per tonne cfr a week earlier.
Shredded scrap in containers was heard sold from the US at around $465 per tonne fas, which one trading source said was equivalent to $500-507 per tonne cfr Bangladesh. Offers were heard at $510-515 per tonne cfr from the UK.
Fastmarkets' price assessment for steel scrap, shredded, containerized, import, cfr Bangladesh was $500-510 per tonne on Thursday, up $5-10 per tonne from $490-505 per tonne cfr a week earlier.
Most market participants believe that prices will be weaker by next week, however.
“The market will soften and prices will fall. Already Pakistan has started reacting and Turkey is retracting from the market slowly,” a South Asian trading source said.
“All of this is because of very high inventory in many countries - including Turkey - and most projects [that require finished steel] are unable to take scrap prices higher than these so the viability is lost,” he said.
“A lot of people have stopped buying steel so finished steel inventories are increasing everywhere and prices are adjusting now,” he added.
Weak steel markets continue
While Bangladeshi mills have come back to the market for bulk cargoes, they have done so reluctantly against a backdrop of weak steel prices, Fastmarkets heard.
“Scrap prices are not very realistic for us – they're very high and have gone up about $100 per tonne in the last month. Domestic steel sales prices haven't performed as well as raw materials prices,” a Bangladeshi steelmaker told Fastmarkets.
Lobbying from the Bangladesh Association of Construction Industry (BACI) in the last week has further hampered steel prices in the country, an exporter source said.
BACI representatives held a press conference on January 9 to complain that rebar costs have risen by 25-30% from November to December, United News of Bangladesh reported.
The group requested policymakers look for ways to reduce these prices or else allow tariff-free steel imports, the exporter source said.
He said that this week, several mills in the capital city of Dhaka have been “liquidating stocks at low prices under pressure from the local government”, which he said led to a price drop of around $25 per tonne across the market.
“Mills in Dhaka make up the majority of the container buyers in the market and they're not buying anything at the moment,” he said.
“Shredded scrap in containers is being offered at $515 per tonne cfr Bangladesh but mills didn't buy at $440-450 per tonne cfr, so why would they buy now?” he asked.
A second South Asian trader was even more pessimistic for the fate of the Dhaka mills, which are all smaller induction furnace (IF) operators.
“Some steelmakers in Dhaka are filing for bankruptcy now, I heard, so it could be a chance for further industry mergers with bigger mills,” he said.
Mills in Bangladesh purchased three bulk cargoes in the last week, with prices easing gently, sources told Fastmarkets on Thursday January 14.