Imported ferrous scrap offers reached a six-week high in South Asia, pressuring mills to pause bookings. Opinions on the price direction are mixed in the global market. Steelmakers are optimistic about improved demand from end-users as infrastructure projects have gradually gained momentum. A freight rate hike on many seaborne routes has increased the landed cost for ferrous scrap containers in South Asia.
A short break in bookings seems to be in the offing as mills have enough inventories to meet their production requirement for the rest of 2020.
The daily Davis Index for containerized shredded, Thursday, settled at $330.43/mt cfr Chattogram up by $1.43/mt, largely due to increased offers which were at $330-335/mt cfr Chattogram. A few trades were also reported at $328/mt cfr Chattogram. P&S scrap from South America and the UK traded at $335/mt cfr Chattogram. As per Davis analysis, freight rates from Los Angeles stands at $1731/FEU.
The index for containerized US-origin HMS 1&2 (80:20), Thursday, settled at $319/mt cfr Chattogram, unchanged. Trades for the UK and US-origin HMS 1&2 (80:20) were at $317-320/mt cfr Chattogram.
In the bulk market, offers from US West Coast suppliers were at $330/mt cfr Chattogram. Freight rates for a 30,000mt vessel have reached $52-55/mt against the usual of $40-45/mt basis, said a bulk trader.
The index for Latin America-origin HMS 1&2 (80:20) settled at $314/mt cfr Chattogram, flat from Wednesday. South American yards offered HMS #1 at $320/mt cfr Chattogram with buying interest at $310/mt cfr Chattogram.
Following increased imported scrap prices, domestic steel and scrap prices in Bangladesh moved up. Domestic shipbreaking scrap equivalent to P&S traded at BDT32,000-32,500/mt ($377.45-386.90/mt) ex-yard Chattogram, up by BDT1,000/mt from the prior week. HMS 1&2 (80:20) was priced at BDT29,000-29,500/mt ex-yard Chattogram, up by BDT500/mt from late last week. Dhaka-based finished steel producers sold rebars at BDT49,500-50,000/mt ex-works, up by BDT1000/mt from the prior week. The sustainability of this price rise, however, is questionable as end-user demand has failed to recover as expected.
Pakistan ferrous scrap importers are paying $3-5/mt higher than their Indian counterparts due to higher container freight charges. Many traders returned to the market for restocking activities. A gradual resumption in mega infrastructure projects is likely to improve steel demand in the country. Compared to the beginning of the week, however, the appetite for restocking has slowed down.
The daily Davis Index for containerized shredded, Thursday, rose by $2.67/mt to settle at $324.67/mt cfr Port Qasim. Trades for UK-origin shredded in containers were at $322-325/mt cfr Port Qasim. Most offers from EU/UK origin were around $325/mt cfr Port Qasim on Thursday.
In Lahore, the local government could ask some secondary steel mills, especially those without smog or carbon emission control machinery, to pause production for a few weeks due to heavy smog. This dip in production could impact domestic ferrous scrap prices.
Containers of Dubai-origin #1 HMS traded at $313-315/mt cfr Port Qasim. The Davis Index for UAE-origin HMS 1&2 (80:20) settled at $311/mt cfr Port Qasim, unchanged from Wednesday. Mills chose to buy shredded over HMS scrap this week.
The index for US-origin HMS 1&2 (80:20) settled at $310.07/mt cfr Port Qasim, up by $1.14/mt from Wednesday. Offers by South American ferrous scrap suppliers were at $305-310/mt cfr Qasim.
In the domestic market, Bala billet prices registered a marginal drop to PKR89,500-90,000/mt ($560-562/mt) ex-works Punjab amid weak demand. Domestic Pure Q toke scrap, equivalent to shredded sold at PKR68,300-68,500/mt del Lahore mill, down by PKR300/mt from Saturday.
Leading Karachi mills offered rebar at PKR109,000-110,000/mt ex-works, with an additional discount of up to PKR1000/mt to encourage trades. The Pakistani rupee has appreciated to PKR160.20 against $1 from 162.5 levels last week, boosting sentiments in the import market.
($1= PKR160.50; BDT84.77)