The elongated trade routes due to geopolitical tensions and supply chain crisis has led to red hot freight rates for all categories of vessels leading to an extreme dearth of tonnage available for recycling. This factor combined with softening of global scrap prices has brought the ship recycling industry to a virtual as the end buyers are not able to offer attractive bids to ship owners. It remains to be seen at which point this sluggishness will end and some deals get finalized.
Pound Sterling experienced a lot of volatility this week as markets digest a flurry of resignations in the UK government along with hawkish comments from the Bank of England. After falling to its two-year lowest on Wednesday at USD 1.187, it rose back to above USD 1.20 mark on Thursday, following the resignation of PM Boris Johnson, a move welcomed by investors as they believe it will reduce trade frictions between UK and EU.
Steel mills in China are warning of crisis conditions in the industry as margins plunge due to weak demand. Stockpiles are rising far beyond seasonal norms after China’s crackdown on its property sector and its Covid Zero policy curbed construction activity. The steel industry’s purchasing managers’ index for June recorded its lowest reading in a decade.
Russian government is likely to extend the export tariffs on scrap from August 1, 2022 till end of this year. The scrap tariffs are aimed at supplying more raw materials to their domestic market when Russian steelmakers face sanctions pressure, Ruble fluctuations, and fluctuations in the cost of raw materials in foreign markets.
In a disturbing turn of events, former Japanese Prime Minister Shinzo Abe passed away after being shot twice at a political event early today morning. He was the longest serving PM who served two terms and was deeply loved and admired by everyone. Our thoughts are with his family and the people of Japan at this difficult time.
Domestic demand for ferrous scrap and their offer prices continued their improvement this week backed by stable domestic demand and expectations of strong demand from China, the biggest commodity producer and consumer, after the news of Chinese government considering a USD 220 Billion stimulus came out.
High power tariffs and thermal coal supply tightness have forced the electric furnaces to curtail production by around 30%. This has led to a drop in rebar production and supply, a factor that is helping prices to stay firm.
The festive holidays are keeping the market activities quiet this week, hence a clearer picture of the domestic scrap demand and prices will emerge next week when the market reopens after Eid holidays.
Heavy rainfall has kept the domestic buying activities subdued but active booking from neighboring markets, especially from Pakistan, have allowed suppliers to keep offers on the higher side.
Imported scrap prices saw a further strengthening of about USD 20/MT week-on-week.
Offer prices from the recyclers of Gadani are reflecting the shortage rates which are unlikely to remain stable in the long run due to the decline in international scrap prices. No significant deal has been finalized so far and the Gadani market will remain closed from today i.e. July 8 to Tuesday, July 12 for Eid holidays.
The country's energy crisis may drag on for months after another failed attempt to import gas, as state-owned Pakistan LNG failed to attract any offers for a USD 1 Billion LNG purchase tender. This demonstrates both the extent of the global fuel shortage, and also the reluctance of suppliers to sell to a country in the midst of an economic crisis.
Imported scrap market activities remained relatively quiet this week despite a further correction of about USD 30/MT in prices. Even though the sentiments are turning optimistic, trading remains slow as suppliers are waiting for more clarity in prices before giving firm quotations.
Turkey announced anti-dumping levies on flat steel imports, saying that shipments from European and South Korean companies were hurting domestic producers. Levies on imports will range from 7% to 12.8% of the purchase price, according to a Trade Ministry decree published in the nation’s official gazette.
Turkey's annual inflation rate jumped to a 24-year high of 78.62 percent in June. The inflation is expected to climb even further in the third quarter amid high energy costs, a weaker currency and the central bank’s reluctance to lift interest rates to stem rising prices.