The sharp volatility in Iron ore and steel prices has revealed the influence of China on the global commodity markets. The sentiments of recyclers have been highly affected with these steep movements, but one should not overlook the fact that the prevailing prices in the subcontinent market are substantially higher in comparison to the prices before this unexpected sharp rise which made them cross the USD 600 mark and the owners are still getting a great value for their aging assets. Currently very few deals are being finalized due to weak sentiments, but the tonnage supply has relatively improved than the previous week.
Chinese steel market activities have cooled down as the nation gears for a week-long National Day holiday from October 1-7. It will be interesting to watch where the price curve moves after this break, as all market participants will get time to ponder over key fundamentals.
Oil had a volatile run this week with a sharp rise in the beginning of the week backed by energy crisis in US and Europe but have been stabilized from Thursday onwards as Gulf of Mexico production resumes.
The imbalance in global supply chains causing a worldwide semiconductor chip shortage has slammed the auto sector this year, cutting factory output by several million vehicles and it is now having a knock on effect in the steel industry. This reduction in steel demand from the automotive industry is contributing to bearish sentiment in the EU market and releasing additional volumes of flat steel to spot buyers.
Domestic melting scrap prices have seen improvement of about USD 15/MT this week which is expected to shore up confidence of the end buyers from Alang regarding the demand outlook.
Due to extremely heavy downpour this week, the recycling yard activities have got hampered forcing all yards to stay closed on Wednesday.
Government extends anti-dumping duty on steel till 31st March 2022. Domestic steel market is going to benefit from this move along with the upcoming festive season and post pandemic demand boost.
India has raised the Goods and Services Tax (GST) for iron ore from 5% to 18% to amend the inverted duty structure in the industry, but the government has not finalized a date on the implementation.
The overall outlook is not buoyant in Bangladesh recycling market due to volatile iron ore prices, but the stable demand from infrastructure sector ensures that the buying cycle keeps moving and few deals are getting sealed to maintain the inventory levels for upcoming demand. The prices being offered are yet to see any uptick, but remain range bound.
As the monsoon season is set to subside, the steel demand is expected to pick-up, keeping the mills active in booking scrap cargoes. Even with good number of orders, the mills are worried that the prevailing freight rates and container availability will affect their operations and bottom-line.
The weakening of Pakistani Rupee against US Dollar is highly affecting the sentiments of end buyers from Pakistan. Those buyers who were placing bids till previous week have now stalled the negotiations and are waiting for the price movements to stabilize before finalizing their offer. It is currently trading at PKR 170.68/USD.
Cyclone Shaheen may bring heavy rains and strong winds across the southern coastal provinces of Pakistan in the coming two days. The sea conditions would remain rough with a high surge at times till October 3 as per the advisory issued by Pakistan Meteorological Department.
Karachi Stock market had a rollercoaster ride this week on concerns about US sanctions after US senators moved a bill seeking a probe into Islamabad’s role in the Taliban’s takeover in Afghanistan.
One Semi-submersible of about 18,000 LDT has arrived in Aliaga this week.
The Turkish Lira weakened on Wednesday to hit an all-time low versus the U.S. dollar, continuing a slump amid worries over President Tayyip Erdogan's influence on monetary policy after the central bank's unexpected interest rate cut last week. It is presently trading at TL 8.88/USD.
The weakening of Lira against USD has led to an increase in finished steel prices as the mills buy most of their raw materials in USD before selling them to the domestic market in the local currency.