South Asian imported ferrous scrap markets spelled out indications of a further amid weak market dynamics. Suppliers, however, remain optimistic about a recovery in prices fuelled by short supply. Buyers refrained from raising bids as they struggled weak downstream demand.
Pakistani buyers booked a few containers at firm prices. Bangladeshi steel mills lowered bids following global cues. Most steel mills focussed on settling their utility bills and other statutory dues with the month drawing to a close.
In Turkey, the disparity between bids and suppliers’ expectations widened weighing down US-origin HMS 1&2 (80:20) bulk prices and the index for the grade dropped by $1/mt to $294/mt cfr Turkey. Falling rebar prices and weakening Turkish currency TRY7.77 levels against $1 from TRY7.62 on Sept 24 could impact bids, and weigh down global ferrous scrap prices $5-10/mt.
Bangladesh mills are distressed in the face of weak domestic steel sales for over a quarter resulting in inventory pile-ups. Imported scrap prices thus remained unviable for most secondary steelmakers. Major mills are seeking government aid to tide over losses incurred due to the pandemic as they believe demand is unlikely to recover before November.
The daily Davis Index for containerized shredded, Wednesday, was at $322.5/mt cfr Chattogram, up by $0.71/mt. Shredded of Australia and Africa-origin in containers traded at $320-323/mt cfr Chattogram this week. But UK yards were unwilling to offer material below $330/mt cfr Chattogram.
Brazilian P&S scrap containers traded at $315/mt cfr Chattogram while offers for the grade of UK/EU-origin at $318-320/mt cfr Chattogram against bids of $310/mt cfr Chattogram.
In other bulk markets, three US west coast bulk sales concluded over the past week. Two shredded cargoes trades were heard at $325/mt cfr levels, however, leading steelmakers in Bangladesh denied these deals citing prices as non-viable and enough scrap inventories. The price level represents a $10/mt drop from prior bulk trade which concluded in early September.
The index for US-origin HMS 1&2 (80:20) in containers settled at $305.36/mt cfr Chattogram, up by $0.79/mt from Tuesday. Sellers offered HMS 1&2 (80:20) at $310-312/mt cfr Chattogram, while bids were at $300-305/mt cfr Chattogram. Major mills have enough inventories to fulfill their orders and appetite for imported scrap could remain weak till November, said a trader.
The index for Latin America-origin HMS 1&2 (80:20) settled at $301/mt cfr Chattogram, down by $4/mt from Tuesday. Offers were scarce and most Brazilian traders sought $305/mt cfr Chattogram for HMS 1&2 (80:20) against bids of $290-295/mt cfr Chattogram. Trades were reported at $300-305/mt cfr Chattogram for Latin American HMS #1.
Domestic shipbreaking scrap equivalent to P&S traded at BDT30,500-31,000/mt ex-yard Chattogram on Wednesday, flat from Friday. HMS 1&2 (80:20) was priced at BDT28,500-29,200/mt ex-yard Chattogram.
Domestic small and medium scale mills cited a drop in billet prices by BDT1,000/mt which were flat for over a month. Domestic billets traded at BDT40,000-40,500/mt ex-works on Wednesday. Small-scale producers offered rebar at BDT49,000-49,500/mt ex-works
Slow domestic finished steel market held back buyers from ferrous scrap trades. The Davis Index for containerized shredded, Wednesday, settled at $312.12/mt cfr Port Qasim, up by $0.26/mt from Tuesday. A few containerized shredded scrap deals were reported at $312-314/mt cfr Port Qasim supplied from UK/Europe yards. A few bids from secondary steelmakers for the grade were still at $305-307/mt cfr Port Qasim. Market opinions were divided about future price trends.
Coinciding with a drop in buying interest from India, HMS scrap prices in Pakistan dropped this week. The Davis Index for UAE-origin HMS 1&2 (80:20) settled at $289/mt cfr Port Qasim on Wednesday, down $4/mt from a day ago. Buyers lowered their bids for HMS 1&2 (80:20) to $285-290/mt cfr Port Qasim. Trades for UAE-origin mixed #1 HMS and P&S sarya scrap were reported at $295-297/mt cfr Port Qasim.
The index for US-origin HMS 1&2 (80:20) settled at $290.36/mt cfr Port Qasim, down by $0.35/mt. Most US-based yards were unwilling to offer large volumes citing expectations of a stronger market in October. Offers were at $295/mt cfr Port Qasim against bids of $285-290/mt cfr on Wednesday.
In the domestic market, Bala billet prices remained flat amid very limited trade activities. Prices were reported at PKR91,200-91,500/mt ex-works Punjab. Domestic Pure Q toke scrap equivalent to shredded traded at PKR71,200-71,500/mt del Lahore plant, unchanged from Tuesday. Weakened demand for finished steel and slower than expected recovery in infrastructure projects prevented domestic prices from gaining momentum.
Most mills are expecting the appetite for ferrous scrap to recover around mid-October breaking a month-long sluggishness. The government is likely to announce measures to aid the industry recover from the COVID-19 pandemic.
Pakistan’s Agha Steel Industries (ASI) has signed MOU with a local wire rod manufacturer, Horizon steel for the supply of refined low-carbon billet. It will supply 100,000mt of low-carbon billets worth approximately PKR10.5bn ($63mn) this year.
The secondary downstream industry relies heavily on the expensive imported raw material. However, in the coming days rising local production will result in import substitution.
($1= PKR165.72; BDT84.67)