The Ship recycling prices are currently experiencing a correction from the heated levels they had reached in the previous two months. After starting the year with levels between 580 and 600,the offer prices from subcontinent recycling destinations crossed the 700 mark in the first week of March as the sudden emergence of geopolitical tensions led to fears of tighter steel supply in the market. Now that steel demand has taken a hit due to an extended lockdown in China and rising inflationary pressure around the world, the offer prices from recyclers have corrected in line with global steel prices, which are still at very healthy level and USD 100/LDT higher than the offer prices in the same period last year. On the supply front, with robust freight rates across all the categories of vessels, the recycling market is expected to witness a dearth in units and therefore the buyers may have to bid competitively to secure tonnage.
Oil prices have been swinging wildly since the geopolitical tensions started as the market is reacting to all sorts of headlines on a daily basis. This week, the demand prospects increased as Chinese authorities planned to ease restrictions in Shanghai and the looming possibility of an EU ban on Russian oil imports have been supporting prices.
Global equities fell sharply this week as supply chain woes continue to fuel inflation and expansionary monetary policies created mountains of debts across the world economy. The United Nations on Wednesday yet again lowered its forecast for global economic growth this year from 4% to 3.1%.
The end buyers from Alang are exercising extreme caution as the steel prices are going through a volatile period but there are good number of inquiries as the recyclers are waiting for right opportunities to secure tonnage for their yards. After experiencing some corrections earlier in the week, domestic scrap prices have remained stable since the past two days.
Following two months of robust growth, India’s steel exports fell slightly due to factors such as competitive pricing of exports from China due to their slow domestic demand, and fewer bookings from the European Union as buyers’ credit lines have got exhausted due to historically high prices.
The end buyers of Chattogram have waited for a long time without making any significant purchases, which is now showing up as a drop in the inventory levels of the yards. Recyclers have started making inquiries at lower levels as the shortage of units in the recycling market is a cause of concern for the yards which are running on low inventory levels.
The further depreciation of BDT against USD continues to weigh down imported scrap trading activities. At present, the LC settlement rate for import surged by BDT 97/USD when the official rate set by the Bangladesh Bank is at 87.50. In the open market, the dollar price crossed BDT 100 for the first time in the country's history amid severe dollar shortage.
Bangladesh is under tremendous pressure to weaken the Taka to protect its depleting foreign currency reserves amid soaring imports against moderate exports and falling remittance
The economy of Pakistan is under an immense pressure due to the continual devaluation of their currency and rising commodities and energy prices. Under the current economic conditions, the recyclers are hesitant to make further buying decisions until the domestic market shows some stability in steel demand and prices.
The Pakistani government on Thursday imposed a ban on the import of all non-essential luxury items like cars, mobile phones, home appliances and weapons under an "emergency economic plan" to save the depleting foreign exchange reserves.
As a means to reduce steel imports and relieve pressure on foreign currency, the government may increase the regulatory duties on multiple items. Steel products may have RDs increased by about 10%.
One cruise vessel of about 9000 LWT has arrived in Aliaga this week.
Domestic rebar prices have declined sharply by over USD 70 in past two weeks due to a dramatic fall in imported scrap prices. Although mills are gradually lowering prices to stimulate sales, the buying appetite is quite weak given the current market conditions.
Imported scrap prices have softened by about USD 20-25/MT this week.
The measures implemented by Turkish government in cooperation with the central bank are not proving adequate to stabilize Lira as it has reached a new low for the year amid spiraling inflation and a widening current-account deficit. It is currently trading at TL15.95/USD.