Ship breaking yards in the Indian subcontinental markets have continued to book smaller tonnage vessels amid steady demand. However, the resurgence of the COVID-19 pandemic has lowered their appetite.
Despite softer global cues led by China where stricter orders from Beijing to continue production cuts to meet green steel making expectations, keep prices under pressure.
With most South Asian yards having limited stock for dismantling, demand from ship recyclers is likely to rebound amid a steady recovery of steel demand. Ship scrap prices are expected to firm up in the coming day, provided the COVID-19 pandemic is controlled, said recyclers to Davis Index.
A spike in COVID-19 cases with the spread of the new variants, globally, has led many countries to announce new restrictions, which could dampen business sentiments in some regions.
|Prices in $/ldt – Week – Aug 2-6|
Indian steel demand and prices both recovered steadily last week, resulting in Indian yards offering competitive prices for the available tonnage in the market.
The biggest cause of concern for Alang yards was the ongoing transporters’ strike. Despite several discussions between the associations and government, the strike continues since July 27. The movement of scrap is impacted and stocks are piling up at the yards.
Also, improving demand from ship plate consumers and higher steel prices are likely to support recyclers. Higher export tariffs from China and Russia prompted Indian mills to seize export opportunities. Mills are now not under pressure to lower finished steel prices.
Indian buyers bought 12,265ldt volume in three sales last week.
The Federal Board of Revenue fixed the value of steel products for assessment of sales tax on the ad valorem basis. It was further clarified that the value of goods will be the value at which the supply is made in case the value of supply of the goods is higher than the value fixed. The new tax policy firmed up domestic sentiment amid a recovery in the country’s steel consumption.
As the COVID cases showed a marginal drop, Sindh province eased the lockdown on Aug 9 but maintained some restrictions until Aug 31.
Amid successive depreciation of the Pakistani rupee against the US dollar, domestic steel prices jumped by over PKR10,000/mt ($61/mt) for rebar and billet in the last two weeks.
In Gadani, sentiments improved but no vessel bookings were reported this week.
Bangladesh’s restocking appetite increased as its national lockdown ends on Aug 11. The ongoing restrictions on public and vehicular movement will be relaxed in phases and all the shops and shopping malls are slated to reopen on Aug 11.
At the Chattogram port’s outer anchorage, several vessels were waiting to unload containers for more than 10 days. With the return of the workforce, this situation could ease this week. As the monsoon starts to retreat, economic activities are expected to return to normal in the coming weeks.
Following months of dry weather and a severe heatwave, the country is facing its worst wildfires in years. In Aliaga, no new vessel bookings or arrivals were reported last week. Demand for finished steel remained below expectations weighing down bids for bulk ferrous scrap. Prices for bulk melting scrap dropped over $10/mt last week. Turkish Lira remained stable at around TRY8.59 against the US dollar.