The good news in the recycling market is coming from India this week with a significant increase in prices being offered by the end buyers. This development is backed by the sharp economic recovery in the domestic market and has now brought India almost at par with its subcontinent counterparts. Bangladesh market is going steady despite the strict nationwide lockdown which has brought the domestic market activities to a halt whereas the end buyers from Pakistan are a bit apprehensive about the ROI prospects from the current prevailing high prices.
China announced the cancellation of VAT rebates for exports of certain flat steel products, including cold-rolled coil and hot-dipped galvanized coil along with raising its export tariffs on ferrochrome and high-purity pig iron from 1st August. The export tariff for pig iron will be increased to 20% from the current 15%, while that for ferrochrome will rise to 40% from 20%. This removal of 13% VAT rebate on the cold-rolled coil and coated steel products was widely anticipated by the market since May and it will have a knock-on effect on prices at the international level.
Oil prices are trading with marginal gains due to tight supplies, a strong demand outlook, and lower US inventories. Even though there is a surge in Delta variant cases across the globe, the demand has remained stable due to the easing of travel restrictions by many countries for fully vaccinated people.
End buyers from India have shown a remarkable recovery and the prices have come at par with other markets, leading to the finalization of few deals within this week. Rising export opportunities for Indian steel mills have offset the fall in domestic demand and hence opened a greater avenue for the steel market of India.
With the removal of tax rebates by China combined with India's Production Linked incentive scheme, the steel producers of India stand to gain by capturing the market share that China is giving up. India is already a preferred exporter for many Middle Eastern, Southeast Asian, and EU countries and now stands to gain more from the market share of China.
There is an ongoing Transport strike in Alang to protest against the rising fuel prices which is now affecting the movement of scrap from the yards to the market.
The recyclers from Bangladesh are more inclined towards smaller tonnage as the ongoing Covid situation in the country has made the buyers reluctant to take any risk for the time being. They are waiting for the markets to reopen before bidding aggressively on available tonnage.
The domestic market remained flat, and mills have stopped their operations due to the strict lockdown extended till 5 Aug by the government. Few mills who tried to function have been levied hefty penalties and have now completely stopped their operations. There was less demand for finished steel too due to the unavailability of logistics for material delivery.
End buyers from Pakistan are showing steady buying interest but are hesitant to push their offering prices as per the current prevailing rates in the subcontinent market. They may lose some units to the competitive bidding buyers from Bangladesh and the strongly recovering market of India.
Amid the continually rising Covid-19 cases, the government has decided to impose a lockdown in Karachi starting tonight i.e., July 30 until August 8. Only Export-oriented industries, which have to fulfil orders, have been exempted along with grocery stores and pharmacies. However, all government offices, educational institutions, shopping plazas, and inter-city transport will be shut down.
No new vessel has arrived in Aliaga this week.
Domestic as well as Imported scrap prices have dropped by USD 10/MT after the mills resumed their trading post the week-long Eid holidays.
The removal of 13% VAT rebate on CRC and coated steel products by China will have a positive effect on Turkish mills’ exports into the EU and is likely to boost offers to the region.
Turkish Lira has remained stable this past week and is currently trading at TL 8.41/USD.
We express our sincere condolences to all our friends in Turkey over the massive forest fires and pray for their speedy extinguishment.