The ship recycling market is seeing increasing offers from end buyers with each passing day due to the tight steel supply and the declining number of vessels being retired for recycling. With the ongoing geopolitical tensions, ocean freight rates are on a rise again and shipowners are holding onto their vessels to take advantage of the available earning opportunities. The demand for tonnage remains high in all recycling destinations to fulfil the domestic and export market requirements.
The Iran nuclear deal which was close to being revived after months of talks have now been stalled citing “external factors” with no indication of when or if they will resume. Russia’s eleventh-hour interference by demanding a “written guarantee” that the sanctions do “not in any way damage our right to free and full trade, economic and investment cooperation and military-technical cooperation with the Islamic state” created complexity and made it difficult to reach a consensus.
Oil prices soared to USD 140/barrel this week due to the news of the U.S. ban on Russian crude imports as mounting sanctions against Russia sparked fears that an already tight market may be stretched further. This price rally took a breather on Wednesday when the U.A.E. called for OPEC+ to boost output faster bringing it to the current level of USD 106/barrel.
The Federal Reserve is expected to raise its interest rate next week in the hope of taming soaring prices even as the ongoing war has already fanned the flame of global inflation.
Steel prices remained on an upward spiral yet again this week as the rising demand from domestic and overseas buyers continues to outpace supply in the market. Although the appetite of recyclers continues to be strong, it remains to be seen till what price level buyers will reach to secure tonnage!
Indian steel mills are rushing to fill a supply gap created by Russia’s invasion of Ukraine, as consumers from Europe, Middle East and Africa turn to the world’s second-largest producer. Even with export being almost USD 250/MT more lucrative than domestic sale, the potential to export more steel remains limited as local demand is booming and mills are already running at peak capacity, limiting their ability to scale up for overseas orders.
Increasing steel demand, limited availability of raw materials, and rising global scrap prices are driving up the offers from end buyers in Bangladesh who are scouting for tonnage amidst an intense price competition with the neighboring markets of India and Pakistan while also being wary of procuring units at such steep prices.
Steel mills have continued to hike prices for the fifth consecutive week, with rebar prices increasing by up to USD 40/MT. Furthermore, the price of imported scrap in containers has also risen by USD 50/MT this week.
The end buyers of Gadani are apprehensive about closing deals at the ongoing elevated levels, coupled with the excess amount they have to shell out due to the depreciation in the Pakistani Rupee which is currently trading at PKR 178.94/USD. Despite the uncertainties, there is stable demand from the recyclers due to the rising domestic steel prices.
The increasing cost of inputs and supply chain disruptions has forced major steel mills to raise steel bar prices by about USD 50/MT this week. The market participants fear that any further increase in prices is likely to slow down construction activities and suppress the steel demand.
Imported scrap prices have increased by about USD 30/MT week-on-week.
Major steel producers have announced a further price hike of about USD 70/MT in domestic rebar this week following the rise in price of imported scrap due to the ongoing Russia-Ukraine conflict. In spite of the dramatic increase in prices, the demand is only getting stronger as the countries which were previously importing from Russia and Ukraine are now turning to Turkey to fulfil their requirements.
The Turkish Lira continued to decline against the dollar amid acceleration in geo-political events. Currently, it is being traded at TL 14.73/USD in the currency exchange market.