From letters of credit challenges and weak economic indicators to encouraging trade finance prospects and promising demand, the South Asian ferrous scrap market has witnessed a rollercoaster ride the first half of this year.
Trade and price trends in the South Asian ferrous scrap market have endured a varied first half of the year, depending on the country.
India has emerged as the leader in subcontinental ferrous scrap on promising finished steel demand and trade finance prospects, while letters of credit (LC) issues in Pakistan and Bangladesh have held back trade in these countries. Moreover, the region also has benefited from falling bulk and containerized freight rates that dropped to pre-pandemic levels as the impact of the Russia-Ukraine war began to ease.
Imported containerized shred, the highest-traded volume grade, averaged $453 per metric ton cost and freight (cfr) to the Indian subcontinent in the first half of this year, falling 20 percent against $567 per metric ton cfr in the first half of 2022 and down 1 percent from the second half of 2022. In the first half of 2023, the highest price for this grade was $486 per metric ton cfr in mid-March, while the lowest was $402 per metric ton cfr in late July.
Kedar Joshi from Davis Index breaks down in this article how each country in the region has fared this year.
India: Leading South Asia
India’s crude steel output trended upward between January and June despite subdued steel exports supported by steady domestic consumption and higher government infrastructure investments.
The country showed an unprecedented appetite for bulk vessel bookings in late 2022, which began receding this year. Between April 2022 and March 2023, ferrous scrap imports hit a record high of 10.3 million metric tons. This figure is projected to grow to 30 million metric tons by 2030 in line with the government’s ambition of 300 million metric tons of production capacity.