BANGLADESH STEEL SCRAP: Import offers climb despite weak steel demand

Steelmakers in Bangladesh are faced with increasingly high offer prices for imported scrap despite dismal domestic steel demand, market sources told Fastmarkets on Thursday July 23.

Higher sales prices to Turkey and Taiwan have left US scrap exporters targeting higher bulk prices into Bangladesh.

Offer prices for US West Coast-origin cargoes of HMS 1&2 (80:20) rose to $290-295 per tonne cfr on Thursday, from $280 per tonne cfr last week.

At least one steel mill is in the market for a deep-sea bulk cargo and a bid was heard at $285 per tonne cfr on Thursday, up from last week’s bid level of below $270 per tonne cfr.

Fastmarkets’ price assessment for bulk cargoes of steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr Bangladesh was $280-290 per tonne on Thursday July 23, up from $270-278 per tonne on July 16.

Two bulk cargoes of US West Coast-origin shredded scrap of 30,000 tonnes each were sold to a Bangladeshi steelmaker at $270 per tonne cfr in the first week of July. These deals join a transaction for 32,000 tonnes of US-origin shredded scrap concluded at $280-283 per tonne cfr Bangladesh, as reported by Fastmarkets last week.

The market was also ablaze with rumors of India paying $270-275 per tonne cfr for shredded scrap in bulk from the US West Coast last week, but this was not confirmed at the time of publication.

Market flooded
“The Bangladesh market is down. Production is low and at a minimum, and mills don’t need material, only what they already have,” one Bangladesh steelmaker source told Fastmarkets.

“Government work and infrastructure projects are not going on,” he said, predicting that such projects would likely restart en masse in late September and that decision would prompt a fresh wave of demand for import scrap.

“We don’t need to buy until September, we have lots of material,” he added.

“I doubt buyers will pay the current offer prices. The Bangladesh market is slow,” one exporter source said.

The continued Bangladeshi Covid-19 crisis and a severe monsoon flood in the northeast of India and much of Bangladesh were blamed for squeezing steel demand this week.

“When it rains in Bangladesh, it pours,” the exporter said. “There is a massive flood going on and the government is concentrating on Covid-19 and dealing with the flood rather than doing any building projects,” he said.

The low demand situation has led to one Chittagong-based steelmaker “dumping” steel billet in the market at the same price as steel from Dhaka-based mills, he said.

The mill sold several thousand tonnes of billet at 39,000-40,000 Bangladeshi taka ($452-464) per tonne into the Dhaka market, he said.

Chittagong-based mills – which are known as the “Big Four” in Bangladesh – usually command a premium over Dhaka mills due to their reputation for being of higher-quality, but this is mostly likely just because they are much larger steelmakers than their Dhaka counterparts, the exporter said.

But despite the low demand, sell-side market participants felt that prices would have to keep rising.

“Turkey is approaching $270 per tonne cfr for HMS 1&2 (80:20), and bulk freights are higher, so Bangladesh [will be] probably closer to $300 per tonne cfr,” one US trading source said.

“There is no possibility that scrap prices will go down. In September and October, scrap supply shortages will raise prices,” the exporter source said.

Wintry conditions will worsen the already-low availability of shredded scrap in areas like the United Kingdom, he added.

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