Prices for bulk cargoes of ferrous scrap imported to Bangladesh sank on Thursday as scrap-heavy steel mills showed less appetite for material, market sources told Fastmarkets.
Mills in Bangladesh have been on a bulk-scrap buying bonanza for much of March - securing at least nine bulk cargoes from the United States, Japan and Australia during the month.
But purchasing has declined drastically in recent days amid higher inventories and the imposition of a Bangladesh-wide lockdown in response to the spread of the coronavirus (Covid-19) in the nation.
Fastmarkets’ price assessment for bulk cargoes of steel scrap, HMS 1&2 (80:20), deep-sea origin, import, cfr Bangladesh was $240-250 per tonne cfr on March 26, down $25-30 per tonne from $270-275 per tonne one week earlier.
“I guess Bangladesh has completed purchases for now. There is a possibility that they’ll stay out of the market for a few months, having stocked up on higher than normal inventories,” one South Asian trader source said.
A mill in Bangladesh booked a 25,500-tonne cargo of Australia-origin material at $265 per tonne cfr Bangladesh for HMS 1&2 (80:20) and at $270 per tonne cfr for shredded on Thursday March 19. Two further bookings for Japanese H1:H2 and Shindachi were heard at $265 per tonne cfr and $287 per tonne cfr respectively late last week.
Offer prices for HMS 1&2 (80:20) from the US West Coast tanked to $250 per tonne cfr Bangladesh this week, from $275-280 per tonne cfr one week prior, with bids heard at $240 per tonne cfr and below. But despite the lower prices on offer, mills showed little interest in fresh orders.
“Offer prices have fallen but with the coronavirus spreading, not everyone is buying,” one Bangladesh-based steelmaker source told Fastmarkets.
The virus has the potential to wreak both social and economic havoc in the country, according to the steelmaker.
“Bangladesh is a dense country like Singapore, but unlike Singapore, there is a lot of industry here,” he said.
“These are very very challenging times for all concerned,” a second South Asian trader said.
Bangladesh instituted a national lockdown on Tuesday following four deaths and at least 39 infections due to Covid-19.
The nationwide lockdown imposed in India from March 25 is also likely to hamper the ease of doing business in Bangladesh’s steel sector, with traders facing problems opening letters of credit at Indian banks.
Bangladesh is heavily reliant on importing Indian direct-reduced iron (DRI) as a feedstock in its induction furnaces, together with both imported and local grades of ferrous scrap.
Fastmarkets’ price assessment for direct reduced iron domestic, exw India was 17,700-17,900 rupees ($232) per tonne on March 20, down by 1,000 rupees per tonne week on week.