Imported ferrous scrap prices in Pakistan finally picked up on Thursday with the indication of more trades at higher prices in the coming days. Domestic demand was limited as mills offered discounts to liquidate their finished steel inventories. In Bangladesh, few mills were active as limited containers were offered to South Asian buyers.
Offers rose to a 13-month high, surpassing levels seen in August 2019 as Turkish appetite for scrap continued to increase. Scrap inventories at Pakistani mills remain limited while Bangladeshi steelmakers await an improvement in end-user demand to resume bulk trades.
Bangladesh
Bangladesh’s domestic steel market showed signs of revival, however, uncertainty on end-user demand remains a cause of concern. Trades for containerised scrap, though limited, closed at prices higher than the prior week as availability of low-priced scrap vanishes on global cues.
The Davis Index for containerized shredded settled at $332/mt cfr Chattogram Thursday, up $4/mt from Wednesday. Trades were reported at $330-335/mt cfr Chattogram for UK-origin material, while offers for EU and Australia-origin were around $325-330/mt cfr Chattogram varying by quality. Prices have hit a 13-month high as shredded was last reported above $330/mt cfr Chattogram in August 2019.
In the bulk market, HMS 1&2 (80:20) and shredded are being offered at $330/mt and $335/mt cfr Chattogram. A mill was negotiating with a US-based supplier for lower prices on Thursday. Trades are gradually expected to increase on improving domestic fundamentals. Small scale mills were running on limited raw material as Indian Sponge iron remains a non-viable option due to higher prices.
Trades for containerised UK-origin HMS 1&2 (80:20) reported at $320/mt cfr Chattogram, up $5/mt from the prior week. The index for US-origin HMS 1&2 (80:20) was at $319/mt cfr Chattogram, up by $2/mt from Tuesday. Sellers offered HMS 1&2 (80:20) at $320/mt cfr Chattogram, while buyers were still at $315-318/mt cfr Chattogram.
The index for Latin America-origin HMS 1&2 (80:20) settled at $310.32/mt cfr Chattogram, up by $0.18/mt from Wednesday. A few containers for Brazilian HMS 1&2 (80:20) traded at $308-310/mt cfr Chattogram, while #1 HMS of South Africa and South American-origin traded at $317-320/mt cfr Chattogram. Supply from Brazilian mill was very scarce amid bullish domestic markets.
Domestic shipbreaking scrap equivalent to P&S traded at BDT30,300-30,500/mt delivered mill on Thursday while HMS 1&2 (80:20) was at BDT29,000/mt ex-Chattogram. Most small and medium scale steelmakers in Dhaka expect prices to drop further in the coming days by around BDT1,500-2,000/mt. Large steelmakers in the country sold rebar at BDT55,000/mt ex-Chattogram. Despite high imported scrap offers, mills had to liquidate their finished steel inventories at discounted rates to generate cash flows, said steelmaker.
It could take another two months for rebar demand in Bangladesh to recover to pre-COVID-19. Infrastructure projects are slowly resuming in many parts of the country. Only major steelmakers are able to make profits while small scale producers offered rebar even at BDT49,000-49,500/mt ex-works. These steelmakers are struggling to settle their due for the April-May months amid severe cash crunch and weak sales of construction steel.
Pakistan
Pakistan steel mills witnessed limited trading for imported scrap but non-availability of low-priced offers forced them to accept higher prices. Pakistani buyers are expected to book containers as demand from downstream sectors is gradually recovering.
The Davis Index for containerized shredded Thursday settled at $326/mt cfr Port Qasim, up $3/mt from Wednesday as mills in Pakistan showed recovering enquiries for imported scrap. Trades for UK-origin shredded in containers, albeit limited, were at $323-325/mt cfr Qasim pushing most offers to $328-330/mt cfr Qasim on Thursday.
Optimisms on strengthening trade relations with China and along with investments for construction projects in Pakistan is expected to benefit the steel sector. Steelmaker Agha Steel plans to raise PKR3.6-5bn ($21-30mn) in an initial share sale as a construction industry in Pakistan likely to boost demand for finished steel products. Expansion by the steelmakers like Agha Steel, Naveena Steel and IIL industries is also on cards.
The Davis Index for UAE-origin HMS 1&2 (80:20) Thursday settled at $309.55/mt cfr Port Qasim, inching up from the prior day. Trades for UAE-origin mixed #1 HMS and P&S sarya scrap were at $312-313/mt cfr Port Qasim.
The index for US-origin HMS 1&2 (80:20) settled at $308/mt cfr Port Qasim, up $1/mt as most offers were at $310-312/mt cfr Qasim against bids of $305/mt cfr Qasim.
In the domestic market, Bala billet prices were reported at PKR92,000/mt ex-works Punjab on Thursday, up PKR500/mt from Wednesday with trades being reported at these levels. Higher imported scrap pushed domestic Pure Q toke scrap equivalent to shredded to PKR71,300-71,500/mt ex-works Lahore, up PKR1,000/mt from last Friday.
Finished steel prices in Southern Pakistan were under pressure as leading steelmakers offered discounts to liquidate inventories. Rebar trades were reported at PKR105,00-107,000/mt ex Karachi after discounts. Gadani’s shipbreaking market was upbeat fuelled by strong global cues. Scrapped containers and tankers were offered at $360-370/ldt, up $10/ldt from the prior week.
($1= PKR166.22; BDT84.75)