The Ship Recycling market remains motionless with barely any activity being witnessed due to lack of tonnage being offered combined with a significant gap in the price expectations of the ship owners and the recyclers. In the subcontinent market, buying inquiries have started coming from Bangladesh and Pakistan as their inventories continue to shrink, leading to an increase in offer prices by about USD 10/LDT, while the steel prices continue to decline in India, leading to a further softening of offer prices by USD 10/LDT. Going forward, we are cautiously optimistic that the offer prices will remain stable with a chance to move northwards if the shortage of tonnage persists. Hopefully, there will be more action in the coming week since most of the Shipping industry is currently reeling from the hangover of Posidonia.
Oil prices spiked to a 13-week high as U.S. demand for gasoline keeps rising despite record pump prices, while expectations of increasing demand from China due to easing Covid restrictions created supply concerns in several countries. WTI is currently trading at USD 121.30 per barrel.
OECD sounds alarm against rising food prices and disruptions in global food supply caused by Russia’s invasion of Ukraine. Since last year, global food prices have risen by almost one-third, fertilizer by more than half and oil prices by almost two-thirds, as per the UN.
The World Bank yet again slashed its global growth forecast to 2.9% this year from 5.7% in 2021, warning that the ongoing war has compounded the damages from the pandemic, with many countries likely to face recession.
The rapid softening of domestic steel prices has toned down the motivation of recyclers to bid competitively for securing tonnage. Only the vessels containing special metals, such as stainless steel, or special machinery and equipment are being inquired about at the present moment.
Steel prices in the domestic market have fallen by almost USD 70/MT in the two weeks since the government levied 15% export duty on steel, effective May 22, to rein in prices in its bid to arrest inflation.
Imported scrap prices have gained stability this week after falling continuously for past four weeks.
Many recycling yards of Chattogram are nearing the end of recycling existing units and have therefore actively started inquiring for available tonnage in the recycling market, resulting in an increase in offer price by USD 10/LDT.
Bangladesh government has announced the budget for next fiscal year which prioritizes domestic investment and export and lowered the import duties of raw materials to encourage domestic manufacturing. The Budget proposed to reduce import tax from 5% to 3% on HR coils and zinc, raw materials used for manufacturing galvanized iron sheets or steel products as these are used in construction of infrastructure.
Imported scrap market saw a number of orders being placed after the announcement of FY 2022-23 budget.
The shrinking inventory of the recycling yards and the scarcity of scrap in the mills is driving buying interest from the end buyers of Gadani, leading to an increase in offer prices by USD 10/LDT, but no deals have been finalized as the price levels are still not appealing to the ship owners.
Imported scrap market bounced back this week as buyers actively secured cargoes to replenish low inventories. Tight domestic scrap supply also kept mills busy booking imported scrap cargoes.
PKR dropped by Rs. 4.91 during the week and touched 202.83, partly due to rumors that the government is considering freezing foreign currency accounts and partly due to huge oil import payments. It is currently trading at PKR 202.33/USD
Steel mills are delaying new bookings to await a clear direction before opting for the next round of purchases due to high energy prices and depreciating currency. The steel industry participants remained quiet this week as demand decreased due to high energy prices and depreciating currency.
Imported scrap prices have further softened by USD 30/MT weekon week.
Turkey’s lira tumbled beyond 17 per dollar amid a rush for foreign currency that was sparked this week after President Erdogan ruled out higher rates despite soaring inflation. Over the past five meetings, the Central bank has held policy rates at 14% even as consumer-price growth surged to 73.5% amid a global supply crunch. As a consequence, Turkey now has the world’s deepest negative policy rate when adjusted for inflation.