Ship recycling market is experiencing a comparatively better inflow of tonnage than previous week due to a slight drop in sea freight rates, particularly in the capsize segment and the firm rates being offered by the recyclers, making the ship owners pay attention. Bangladesh is leading the price chart with consistent demand from their domestic market for finished steel closely followed by India whereas Pakistan is witnessing a slightly flatter demand curve due to weak demand from the local market.
There seems to be no immediate solution to high oil prices as the demand has roared back to pre-pandemic levels whereas the investment in oil and gas are not back to where they were before the COVID-19 crisis. The direction of movement of oil prices is currently being speculated on the outcome of Russia-Ukraine situation and revival of Iran’s nuclear deal. Oil is currently trading at USD 91.99 per barrel.
Tensions have escalated in the Russia-Ukraine crisis as shelling broke out on Thursday in the eastern Ukraine and both sides claim the other violated a ceasefire. Amidst the rising tensions, US Secretary of State and Russian Foreign Minister have agreed to meet next week in Europe — provided no invasion would have taken place before then.
Chinese authorities have resumed their campaign to prevent raw material prices from overheating by halting Coal price reporting by two major Coal data providers since they view these price movements as irrational.
The domestic steel prices remained volatile this week but ended with an upward trend as the end user industries in India continue to remain on the upswing, maintaining stable demand for ship plates. There is a demand for tonnage, but most recyclers are hesitant to finalize deals at these levels in fear of any price decline in future.
Domestic scrap prices moved up by USD 10/MT as limited availability forced buyers to raise their bids to procure requisite volumes.
An upward trend is evident in the market with continual rise in offer prices from end buyers for the available tonnage. The buying interest for mid-sized tonnage is quite high whereas for larger vessels there are very few offers due to already elevated price levels.
As was expected since last week, major steel mills have raised their re-bar offers by about USD 15/MT due to increased costs and end-user demand.
Imported scrap increased by about USD 5/MT this week backed by supportive domestic demand.
The demand for finished steel is yet to pick up in Pakistan despite the improved weather conditions and this is making the recyclers reluctant to bid high prices for the available tonnage in the demolition market. The offer prices remain range bound, and the volatility of PKR also remains a matter of concern for end buyers.
Pakistan Association of Large Steel Producers (PALSP) approached authorities including FBR and recorded the industry’s concerns regarding the Sales Tax laws due to which the local steel industry remains unable to supply steel to Chinese companies for the construction of various projects in Gwadar under much-hyped China Pakistan Economic Corridor (CPEC), including a free zone, an airport, and others. Currently the contractors for these mega projects are importing raw materials ignoring the local industry which has ample capacity for producing world-class steel.
There is a dynamic upward trend in offer prices from end buyers of Turkey amid a non-stop surge in domestic and imported scrap prices. The offer prices have increased by about USD 20/MT in all segments.
Most of the ship recycling workforce in Aliaga is on strike demanding for better payment and employment conditions. Around 1500 workers are claiming that they do not earn enough money, with their recent pay raise remaining below the galloping inflation rate. Exercising their right of peaceful assembly according to Turkish constitutional provisions, people gathered in front of the offices of the Ship Recycler’s Association and, shouting slogans, marched to the yards. The production at all 22 facilities has been halted.