The subcontinent market is stable with good buying interest from Pakistan and Bangladesh. The national budget of both the countries have been announced with no major implication for the recycling industry which has ended the brief phase of uncertainty and led to an increase in the enquiries coming from the end buyers of both these markets.
The prices may soon cross 600 mark as the tonnage supply is still on lower side. The tonnage supply may bounce back if the rumors around the U.S. Biden administration lifting the imposed sanctions on Iran is true, as it will overcrowd the tanker sector and push many vessels to the recycling market.
Crude oil prices fell nearly 2% on Thursday as the dollar strengthened after the U.S. Federal Reserve signalled it might raise interest rates which will lead to lower inflation. The oil market is not only driven by fundamentals which are currently supportive, but also financial investors buying oil for inflation hedge and dollar strength.
China’s steel export offers plummet as the mills are waiting for a clarification on export duty. If the export tax is imposed, it will lead to a significant reduction in steel export and maintain sufficient supply in the domestic markets. China wants to reduce the production of steel to help the country attain its decarbonization goal.
There is no significant activity in the market as buyers are apprehensive towards buying at the prevailing price levels even though the local market is supportive because they feel the market has not completely recovered from the setbacks caused by the devastating second wave.
Although consumption and demand are still trepid, Indian steel prices do not seem to ease in the second half of the year. The demand is expected to hike after the second wave of the pandemic as the auto sector and real estate sector will witness a boom in the upcoming festival season from August to December.
Indian Rupee recorded a sharp fall on Thursday when it breached the 74 level closing at 74.08 due to fears of U.S. interest rate hike taking place earlier than expected. Its currently trading at INR 73.93/USD.
The end buyers from Bangladesh are showing healthy buying interest as the price gap between ship scrap and containerized scrap is shrinking. Most of the large ship recyclers have their own rolling mills and they prefer to buy ships instead of ferrous scrap as the ships give them other valuable metals in addition to the ferrous scrap.
Imported scrap prices have seen a rapid rise this week as traders are actively restocking ahead of the monsoon season.
A new deep-sea terminal is being constructed in southern Bangladesh’s Port of Payra. The dredging works will start immediately and take approximately 3 years to complete and will eventually release pressure from the congested Port of Chattogram.
The National Budget announced last week had no major effect on the Ship recycling industry and thus the end buyers are back in the field. The domestic market is stable and imported scrap prices have increased by about USD 10/MT this week giving the required motivation for end buyers to bid competitively.
Pakistan Rupee fell against USD in both interbank and open markets lowering the profit margin of ship recyclers who have finalized their deals in earlier USD to PKR conversion rates.
The government has suggested the reduction or removal of customs duty, additional customs duty, and regulatory duty on imports of the hot-rolled coil and hot-rolled stainless steel in the country’s budget for 2021-22, the details of which are yet to be announced.
Imported scrap prices have softened by USD 9/MT this week and the market is relatively quiet in expectation of further softening of prices.
US Fed’s clear indication towards monetary tightening threatened further weakness for the Turkish Lira which depreciated this week and is currently trading at TL 8.71/USD. The central bank kept interest rates below inflation last year to help the government increase its borrowing power and stimulate economic growth. The policy backfired, leading to higher inflation and steep losses for the lira, prompting the bank to spend billions of dollars of its foreign currency reserves defending it.
Mass vaccination drive is going on in full swing in Turkey with nearly one-fourth of its population already been administered the first dose. A curfew from 10 p.m. to 5 a.m. on Monday to Saturday and a full lockdown on Sunday is still in place.