In the post-Covid era, unpredictable is the new normal. With so much changing around the world in the blink of an eye, the best we can do is to keep you updated with what is happening right now and make some calculated macroeconomic projections for the future. Currently, the subcontinent market is witnessing some adjustments as the end buyers are being cautious in offering prices, but there is a good appetite coming from recyclers of Pakistan as their inventory levels show decent buying scope while the recyclers from India and Bangladesh are participating with slightly dull appetency. Overall, the demand for steel will stay robust and the market should remain range bound.
To reduce its carbon footprints, China is moving towards the usage of finished raw materials and scrap for its steel requirements leading to an increase in import inquiries from China for billets and scrap steel. This move has significantly improved export opportunities for the CIS region and other Asian steel making countries.
The iron ore price has dropped 40% from USD 220 in July to the current trading level of USD 133.82, mainly due to lower imports by China following its move to control steel production to meet carbon emission norms.
Crude prices continue their volatility due to prolonged outage of oil production as Hurricane IDA has heavily hit US Energy markets and the offshore oil sector is having a tough time in resuming its operations due to extensive power outages and damaged infrastructure.
The price of ship plates in India has slightly softened and has made the end buyers cautious to offer prices at prevailing levels. Nevertheless, the scarcity of available tonnage is ensuring stability of prices as the deals are getting finalized at prevailing levels only.
The decarbonization drive in China and the protectionism measures being undertaken by several countries had led to a growth of Indian steel exports by 9.2% during the April-July quarter on a year-on-year basis. China’s move has paved the way for India to enter into new global markets where China was having a dominant market share.
The Indian economy is seeing a better-than-expected recovery and this growth rate will sustain even if there is a third wave of COVID-19, as per the latest report from Finance Ministry.
The end buyers from Bangladesh seem to be taking a breather before they hit the market again and start bidding competitively with their neighboring counterparts. Presently, the market sentiments are dull with lesser inquiries coming from the recyclers.
The imported scrap market remained less active throughout the week leading to prices remaining unchanged on a week-on-week basis.
Major steel mills in Bangladesh have kept their Rebar offers unchanged at USD 845-860/MT which are likely to rise due to increasing demand coming from the construction sector.
The Gadani market is the most interesting watch of the upcoming week as it may lead the price board in the coming few days. The inventory levels of many yards are plummeting, and the end buyers are actively scouting for available tonnage in the recycling market.
The recycling yards are facing an acute shortage of Oxygen and are currently running on one-third gas capacity due to the rising number of COVID-19 induced hospitalizations. The NCOC has extended restrictions on 24 districts of the country till September 15 due to the high infection rate, including a ban on all types of gatherings, gyms, intercity public transport, and closure of the education sector.
The Pakistani Rupee is continually weakening against US Dollar and is currently trading at PKR 168.03. This devaluation of PKR is slicing the margin of all end buyers who are due to make payment of their deals in the present exchange rates.