The ship recycling market witnessed very limited activity this week as the owners and end buyers are both trying to ascertain the future price trends before committing to deals. Among the three major subcontinent players, the recyclers of Pakistan are showing healthy buying interest and are therefore leading the price charts followed closely by India and Bangladesh. The overall market sentiment indicates the price range to stabilize in the USD 550-600/MT range.
Sea freight spot prices may finally have peaked, according to the Drewry World Container Index. After 22 consecutive weeks of increases, the index stopped its rise this week at a rate of USD 10,377.19 per 40 ft container, which is 299% higher than the same week last year.
Oil prices hit 2-month high supported by growing fuel demand and a draw in U.S. crude inventories as production remained hampered in the Gulf of Mexico after two hurricanes. The current shortage of natural gas is also contributing to this push in crude oil demand and prices.
The global stock and bond markets are closely watching Evergrande Group, a Chinese property developer that is on the brink of missing payments on its USD 300 Billion debt. If not resolved, it threatens to become the largest debt default by a company in Asia, which could jolt investor confidence across markets worldwide.
The end buyers are showing mild buying interest at the prevailing rates as the ship plate prices continue to stay volatile. On the demand front, the domestic market outlook remains firm due to the upcoming festive season in India which leads to a substantial increase in the sale of consumer goods and automobiles.
Domestic Steel Mills are making huge expansion plans to cater to the growing demand of Indian steel in the global market after China imposed export taxes to discourage large scale steel production in efforts to reduce carbon emissions. State-controlled steel producer Steel Authority of India (SAIL) plans to raise its crude steel capacity to 50 Mn MT/Year by 2030, adding to the list of domestic producers that are expanding in expectations of firm demand and stronger steel prices in future.
The domestic steel demand has slightly improved in Bangladesh backed by the growing number of Infrastructure projects in the country, but the recyclers are still averse to bid at higher rates. Few range-bound sales are being concluded as inventory levels decline in some yards.
Operations of the Chattogram sea port were highly impacted this week due to the 72-hour countrywide work abstention enforced by a section of logistics service providers. This strike was called to put forward a 15-point demand from the transporters and it suspended loading and unloading activities in the port for 35 hours.
The end buyers of Pakistan are giving required boost to the weak sentiments of subcontinent recycling market by showing active buying interest and offering competitive prices.
The government of Pakistan has lowered the sales tax rate on ferrous scrap from 17% to 14%. This amendment relates only to steel melters importing scrap for further processing while for traders dealing with scrap as a finished product will have to pay the sales tax at 17% as before.
Ferrous scrap import prices into Pakistan have fallen by around USD 10-15/MT as very limited deals concluded this week.
Pakistani rupee gained some strength from its all-time low value of PKR 169.94/USD in the previous week to its current level of PKR 169.37/USD.
One Drill Ship, one Reefer and a Shuttle Tanker has arrived in Aliaga this week.
Turkish Lira falls to a near record low after the Central bank unexpectedly cut its benchmark interest rate from 19% to 18%. Central banks typically raise interest rates in response to fast inflation, but Turkey’s president who exerts influence over the central bank, has been in strong support of maintaining easy credit. It is currently trading at TL 8.81/USD.
The domestic rebar market observed mixed sentiments as some suppliers kept their prices firm while other have reduced their prices to encourage buying.