The subcontinent recycling market witnessed very limited activity this week due to fewer units being circulated and mild buying interest from the recyclers. Prices remain range-bound with slim chances of going upwards in all the three major subcontinent markets as the end buyers have decent inventories in hand and they are waiting for the prices to stabilize further before finalizing new deals. The demand is markedly low for bigger units as buyers are apprehensive of dealing in larger tonnage in the prevailing rates which are swinging around the USD 600 mark.
Iron ore prices have dropped to a near three-month low as China’s imports have dropped following its move to control steel production during the current half to meet carbon emission norms. Authorities in the steel production hub Tangshan city have issued an air quality control plan for the Beijing Winter Olympics in February, imposing ultra-low emission standards across the steel sector until March. Iron ore has peaked during May-June and its prices are headed south for the rest of the year.
Oil prices maintain their volatility this week as well due to mixed signals coming from different parts of the world. On one side, the United States urged the OPEC+ to boost oil output to tackle rising gasoline prices that they see as a threat to the global economic recovery, whereas on the other side, the new pandemic curbs in Asia, especially China has placed concerns on oil demand from Asia.
The buyers from India are showing healthy appetite as the domestic steel market has improved to a great extent and there is good demand from user industries like construction and automobiles.
The ongoing transportation strike in Alang with demands to increase truck fares and abolish loading charges is highly impacting the operations of re-rolling mills and ship recycling yards. It has been more than 17 days and still there’s no resolution in sight so far.
The global drop in iron prices has benefited the Indian user industry, mainly steel firms as the National Mineral Development Corporation, the country’s largest iron ore producer has reduced lump ore prices this week.
The end buyers from Bangladesh are offering stable prices despite the economic slowdown caused by the extended lockdown. Domestic steel market has now regained momentum after mills resumed their operations from Wednesday onwards.
After a longer than expected Covid induced National lockdown, Bangladesh has lifted the restrictions from 11th August and released some protocols for social distancing. Though many medical organizations have advised against lifting lockdown at this stage with Covid cases still at frightening levels, this decision has been taken by keeping in mind the economic situation of the country during the lockdown period and the unprecedented losses being faced by smaller businesses.
The local ship plate prices have increased by USD 35/MT as the ship recyclers are taking into account the recent changes made by the tax authorities regarding the increase in minimum value of many steel products for calculation of Sales Tax. This sudden hike in prices is not going down well in the domestic market and it will take some time before the market accepts these price levels. A delegation of Steel industry associations, Ship Recycling association and large-scale wire rod manufacturers are raising their concerns with the relevant tax authorities to resolve the issue.
The end buyers are in panic mode since the announcement and are not willing to commit to new tonnage for the time being. There has been no purchase and sale activity in Pakistan during the whole week due to the uncertainty caused from these tax changes.
Two small offshore units have arrived in Aliaga this week.
The imported scrap prices continue their downtrend and fell by almost USD 10/MT whereas the domestic steel prices have dropped by USD 15/MT.
The Turkish lira maintained its stability this week as the Central Bank held its benchmark interest rate, defying President Erdogan’s calls for a cut. It is currently trading at TL 8.56/USD.
After 2 weeks of continual efforts, major forest fires that tore apart large swaths of forests have been extinguished. Some small wildfires are still ongoing, but the situation is under control now.