The subcontinent recycling market remains range-bound despite weak market sentiments weighed down by sliding iron ore prices. The market witnesses this cyclical nature of prices on regular intervals but on a wider outlook, the demand for steel will remain stable as the world economy is set to witness recovery after all major countries achieve their vaccination goals and fully open their markets for global trade.
The price of iron ore which hit a record above USD 233/MT in May’21 has fallen roughly by almost 35% since mid-July on concerns about demand from China, which makes more than half of the world’s steel. This downturn has dealt a blow to iron ore producing countries, notably Australia and Brazil, which are already battling to protect fragile economic recoveries from recent Delta variant outbreaks.
Oil prices are in a seesaw ride since past two weeks and are changing in a blink and miss pace. Prices saw a rise in the beginning of the week as the market braced up for a disruption of supplies from Mexico in the wake of a fire that has cut state-run Pemex's oil output by about 25% since Sunday, but again took a downturn on Thursday as escalating worries over the widespread delta variant led to increased restrictions across borders affecting global demand.
The Alang market is behaving in a very sensitive manner for any global cues regarding steel demand and prices. Even the slightest of negative news are pulling the markets down swiftly whereas with positive news the markets are going up passively. This skepticism is not a very healthy sign for any industry as the market participants need to understand the macroeconomic factors before reacting to any downtrend.
Although there is a good demand for Indian steel from the exports market, seaborne buyers are not very confident of booking material from the Indian market amidst a severe container shortage which profoundly impacts their profit margins. Due to the issue of container unavailability, many exporters are unable to fulfil their orders on time.
The price offering from end buyers of Bangladesh remains moderate as recyclers are in a wait-and-watch mode and holding their offers till they can gauge the market better.
The domestic demand for steel remained subdued due to the ongoing heavy rainfalls. Imported scrap market remained inactive as well due to lower buying interest.
Major mills kept their offers unchanged due to inactive market conditions and expect the steel market to gain momentum from September onwards as the monsoon will subside and the buyers will be back to replenish their inventory levels.
The end buyers from Pakistan are hesitant to offer prices due to the uncertain market conditions but the prices have improved from previous week with some good offers coming for current units in the market. Adding to the woes of Gadani based Ship Recyclers are the recent tax issues and weakening Pakistani Rupee which continues to lose ground against US Dollar and is currently trading at PKR 166.58/USD.
Pakistan's National Tariff Commission has announced a temporary 4-month preliminary anti-dumping duty on CRC and sheet imports originating from Taiwan (6.18%), the European Union (6.50%), South Korea (13.24%), and Vietnam (17.25%). The duty has come into effect from 23 Aug'21 after the findings from an investigation showed that domestic manufacturers were facing material losses due to imports at dumping level prices.
5 small units between 1,000-2,000 LWT have arrived in Aliaga this week.
There’s further softening on Imported scrap by about USD 5/MT and the domestic prices have dropped by almost USD 15/MT.
Turkish Lira has gained strength and stability and is currently being traded at TL 8.38/USD.
The surge in COVID-19 cases have shown no signs of slowing down but the expanding vaccination program has given the government confidence to reopen schools from September 6 onwards. As per recent reports, Turkey is expected to be removed soon from UK’s travel red list.