The end buyers in subcontinent are showing a decent appetite for available tonnage even with trepid domestic demand for steel because of the paucity in the supply of tonnage in the demolition market. With escalating oil prices, the number of offshore vessels coming for recycling may take a hit. This scarcity in supply has maintained the attractive price levels and competition among buyers to secure available units.
The Russian government has approved temporary export duties on 340 steel and non-ferrous metals sold outside the Eurasian Economic Union (EAEU), which are set to take effect from August 1 through December 31. The new duties system will take 15% as a base and involve a metal-specific rate ranging from USD 54/MT to USD 2,321/MT.
Oil prices rose to a nearly 3-year high on Thursday on indications that OPEC+ producers could delay increasing their output while rising global fuel demand causes supply to tighten.
The UK on Wednesday introduced emergency legislation to protect domestic steel producers from a flood of cheap imports by extending the 25% tariff on the import of certain steel products for another year.
The continued rise in Covid infections in many countries around the globe has worsened the crew change crisis and this issue needs special attention from respective governments by giving all international seafarers priority access to vaccines, which in turn will enable them to travel freely.
Domestic market sentiments are hit by sluggish demand and seasonal disruptions caused by the monsoon. Recyclers are still cautious to bid prices at prevailing levels as there is softening of about USD 27/MT in plate price this week.
The export activities have dwindled as there are not many overseas buyers due to lack of vessels, high freights, and quarantine issues at foreign ports for vessels from India.
The demand has not picked up from Infrastructure and Automobile sector due to liquidity crunch in the market amidst monsoon, frequent lockdowns, and looming fear of a third wave of Coronavirus.
The domestic market has softened due to the strict shutdown in effect for at least 7 days which can be increased further if the rising Covid infections do not come under control. The end buyers are keen to buy smaller tonnages while there is very little interest in the market for the larger tonnages.
Under the current lockdown, all sorts of domestic transportation have been closed however the international transportation by way of air and sea has been exempted from the ban. The activities in ship recycling yards will continue however the pace of work may take a hit due to some migrant workers having left for their hometowns.
Containerized scrap offers climbed by USD 5-10/MT this week. Buyers continued to book scrap containers in small quantities, to restock for the monsoon season.
The demand from end buyers is firm backed by stable ship plate prices in the domestic market. However, the recyclers are facing multiple issues due to slowdown in obtaining cutting permissions from authorities such as:
1) Shortfall in liquidity position of the recyclers leading to delay in repayment of funds to bank.
2) Scarcity of available scrap in the market.
3) Heavy mark-ups charged by banks.
4) Lost opportunity cost of capital for the investors, recycling yards and other relevant industry partners.
A timely and appropriate decision from the authorities regarding the alleged Tanker issue is required to protect the industry from facing any further loss of time and resources.
The domestic demand is expected to boost as the third stage of normalization process is underway in Turkey. From 1st July, most of the Covid-19 induced restrictions have been eased on business activities and events, and weekend curfews have been lifted. The pandemic situation has currently stabilized with daily infection numbers remaining steady around 5,000 cases.
Steel prices have been stable both in domestic market as well as the imported scrap.
The Turkish Lira regained some strength after hitting 8.79 against the dollar in previous week. It is currently trading at TL 8.7/USD.