BANGLADESH STEEL SCRAP: Higher freight jacks up price but demand still poor

Prices for steel scrap into Bangladesh continued to move up during the week to Thursday November 5 amid supply-side tightness and high freight costs, sources told Fastmarkets.

But steel demand remains relatively weak in the country, with many mills still sitting on high inventories.

“Bangladesh is the opposite of the world trend and steel prices are low. Import costs are going higher, however, and everyone is sitting on a lot of inventory,” a Bangladeshi mill source told Fastmarkets.

“Buyers in Bangladesh are taking a little pause. They are not sure what will happen next. Container scrap prices are rising and the big mills are not able to come to a consensus to raise their product prices,” an exporter source said.

“There is a slowdown in Bangladesh’s steel market. Buyers bought scrap in recent months because they thought the scrap market was low, but steel markets have not picked up and they are now sat on a lot of scrap,” a South Asian trader said.

Fastmarkets heard that larger Chattogram-based mills were listing rebar at 56,000 taka ($648) per tonne ex-works on Thursday, but Fastmarkets understands that sales prices may be closer to 53,000 taka per tonne after negotiation and discounts are given.

Container freight pushes up prices

A shortage of containers in South Asia, caused by high demand from the grain season and rising garment exports from Bangladesh and India, is driving up freight rates, market participants said.

The high container freight rates, together with stunted supply of shredded scrap across Europe, the United States and Japan, has led to another rise in containerized scrap prices in Bangladesh over the past week.

Shredded scrap in containers from Europe was heard sold at $342 per tonne cfr Bangladesh over the past week, while US-origin material was sold at $340 per tonne cfr. Australia-origin shredded scrap was heard sold at $335 per tonne cfr on Thursday evening after the assessment period was closed.

Offers for UK-origin shredded in containers rose to $345-350 per tonne cfr.

Fastmarkets’ price assessment for steel scrap, shredded, containerized, import, cfr Bangladesh rose to $340-342 per tonne on Thursday, up by $5-7 per tonne week on week from $335 per tonne previously.

Chile-origin HMS 1&2 (90:10) was sold at $325 per tonne cfr Bangladesh over the past week, while offers from Australia for HMS 1&2 (80:20) were at $325 per tonne cfr.

Fastmarkets’ price assessment for steel scrap, HMS 1&2 (80:20), containerized, import, cfr Bangladesh was $320-322 per tonne cfr on Thursday, up from $312-316 per tonne cfr one week earlier.

Bulk markets quiet

With US export markets largely quiet this week while the result of their country’s presidential election remains on a knife-edge, together with low supply, a lack of bulk offers to Bangladesh was heard over the past week.

Market sources said that US sellers would most likely accept prices of $330 per tonne cfr for deep-sea HMS 1&2 (80:20) into Bangladesh, while buyers would likely need to pay up to $325 per tonne cfr to secure any material.

Fastmarkets’ price assessment for bulk cargoes of steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr Bangladesh was $325-330 per tonne on Thursday, up $10 per tonne from $315-320 per tonne a week earlier.

The price assessment for bulk cargoes of steel scrap, shredded, deep-sea origin, import, cfr Bangladesh was $331-336 per tonne on Thursday, up $10 per tonne from $321-326 per tonne last week.

That meant that shredded prices retained their $6-per-tonne premium, which is up from $5 per tonne before last week, after market participants told Fastmarkets that tight supply of shredded means that consumers must pay more for the grade in bulk.

Talk of Bangladesh purchasing Japan-origin H2 scrap at $320 per tonne cfr surfaced on Friday, but this was not confirmed by market sources at the time of publication.

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