The ship recycling industry is continually showing strength and is able to keep its head above water despite the ongoing COVID-19 catastrophe due to the soaring steel demand and prices. Global steel markets are witnessing an unprecedented rally and the prices are expected to remain elevated for the remaining part of the year supported by infrastructure focused global stimulus plans.
In the subcontinent market, as India is grappling under the Coronavirus crisis, the buyers are reluctant to proceed further with new purchases till the situation stabilizes. The end buyers from Bangladesh and Pakistan are offering competitive prices and are able to secure tonnage but the ongoing high prices due to current scarcity of tonnage is making many end buyers apprehensive of the viability of the deal and the return on investment.
China has finally made the highly anticipated announcement about the removal of VAT rebates on exports of 146 steel products from May 1. Additionally, they have also cut the import duty on pig iron, crude steel, recycled steel raw materials and ferrochrome. These moves show the Chinese government’s intent to shore up steel imports and curb steel exports with the aim of ensuring the domestic supply of iron ore along-with encouraging the steel industry to reduce energy consumption.
Seaborne iron ore prices fell today as the market is expected to have limited demand from May 1 to 5 due to Labor Day public holiday in China.
The market moved at very slow pace this week as many end buyers have been tested positive and are under isolation. The absence of oxygen has halted the operations in recycling yards and the overwhelming increase in number of cases has made it difficult to predict when the market will return back to normalcy.
Demand for steel in the domestic market will falter in the short term as most of the industrial production especially in auto sector has come to a standstill.
Increase in steel prices in Bangladesh is giving a boost to end buyers to bid competitively for the available tonnage in the market.
The government has extended the restrictions on public movement and gathering for another week in a bid to stem the spread of COVID-19. The restrictions have been extended from April 28 to May 5.
The end buyers from Pakistan are willing to buy more assets and are actively negotiating, but the continual upswing in prices is making them hesitant to offer such burgeoning prices.
Almost all major hospitals have signalled that the country may soon witness acute shortage of oxygen. Pakistan Steel employees and workers’ union leaders have urged the government to reactivate the Steel Mill’s oxygen plant to meet the upcoming surge in demand for oxygen.
No new vessel has arrived in Aliaga this week.
Import scrap price have increased by USD 12/MT whereas the domestic prices are same as previous week.
European Commission intends to introduce Carbon Border Adjustment Mechanism (CBAM) which could bring a drastic change for all companies exporting goods to European union from countries without a national emission trading system. “As Turkish mills are already investing in green steel, I don’t think that the CBAM will have a significant effect on our exports to the EU,” said Veysel Yayan, secretary general of the Turkish Steel Producers’ Association (TCUD).