BANGLADESH STEEL SCRAP: Prices slide despite high freight costs

Buyers in Bangladesh, Pakistan and India have been successful in the past week in their attempts to reduce import prices for containerized scrap.

“Asian mills appear to be winning in this round of buying,” a trading source in the United States said.

At least two Bangladeshi steelmakers booked imported shredded scrap in containers at $480 per tonne cfr for United Kingdom material at the beginning of this week. A deal in the middle of the week involving 3,000-4,000 tonnes of shredded scrap was heard at $476 per tonne cfr.

By Thursday, prices had fallen to $470 per tonne cfr, sources said.

That put Fastmarkets’ price assessment for steel scrap, shredded, containerized, import, cfr Bangladesh at $470-480 per tonne on Thursday March 11, down by $10-15 per tonne from $485-490 per tonne a week earlier.

The sharp drop in prices led to some consumers sitting out the market and waiting for further activity.

“Only a few buyers are in the market right now,” a major exporter source said.

A South Asian trader said that demand was also being constrained by a recent drop in domestic steel prices in Bangladesh.

“We expect prices to come down more, and maybe they will fall to $400 per tonne,” a Bangladeshi steelmaker source said.

He added that he thought Turkish and Bangladeshi scrap buying would slow down on the run-up to Ramadan, which begins on April 13.

“The market has to soften more now – weather conditions have improved in supplier countries and scrap inflows are increasing,” a second major exporter source said.

A South Asian trader said buyers were waiting for prices to come down further.

“I predict there will be 10 days of radio silence before the market goes up again,” the trader said.

Heavy melting scrap 1&2 (80:20) was sold in containers at $450-455 per tonne cfr Bangladesh over the last week from sources such as Australia.

Fastmarkets’ price assessment for steel scrap, HMS 1&2 (80:20), containerized, import, cfr Bangladesh was $450-460 per tonne cfr on Thursday, down by $5-10 per tonne from $460-465 per tonne cfr a week earlier.

High freight
Despite arguing that supply was increasing, the second exporter source admitted that demand remained healthy.

“Global steel production is a good indicator demand and volumes produced increased by 5% in January,” he said.

“Higher freight is still keeping prices strong because shipping lines are not releasing idle vessels back into the market,” he added.

High bulk freight costs are causing severe challenges in shipping ferrous materials this week, sources told Fastmarkets on Wednesday.

Container freight has continued to rise in the last week, with quotations for 20ft containers on the route between Australia and Bangladesh recently heard at $1,500-2,000 per container. These compare with $1,250-1,500 per box in late February and from around $800 per container in December.

Bulk freight is also a concern, with routes such as the US East Coast to Turkey voyage ballooning to above $40 per tonne in recent weeks.

The high freight contributed to prices for bulk, deep-sea cargoes being uncompetitive for Bangladeshi buyers this week.

A mixed cargo of HMS 1&2 (80:20), shredded and bonus-grade scrap from the US was heard to have been offered at $485 per tonne cfr Chattogram on Thursday, but indications from the buy-side were only $460-475 per tonne cfr for HMS 1&2 in bulk.

“If I can get HMS 1&2 in containers at $450 per tonne cfr Bangladesh, then I’m not paying any more than $460 per tonne cfr for HMS in a deep-sea bulk,” the mill source said.

The first exporter source said: “Some Bangladeshi mills are not too comfortable in buying on a dip because they are more inflexible nowadays and buying in a falling market must be justified to management.”

Fastmarkets’ price assessment for bulk cargoes of steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr Bangladesh was $475-480 per tonne on Thursday, down by $15-20 per tonne from $490-500 per tonne a week earlier.

The price assessment for steel scrap, shredded, deep-sea origin, import, cfr Bangladesh was $485-490 per tonne on Thursday, also down by $15-20 per tonne from $500-510 per tonne a week earlier.