The New Year 2021 has kicked in with great energy for the recycling market. All three major Sub-Continent markets are buoyant with demand for tonnage at its peak. The skyrocketing price of ferrous scrap has led to this significant increase in demand for all category of vessels. We believe the coming few weeks are going to be quite upbeat for the ship recycling industry at large.
Most selling and buying has been on pause due to the ongoing holidays with new stricter lock downs introduced for the holiday period and beyond in some countries.
Economic activity may slow down due to these lockdowns being imposed to control the resurging pandemic in the winter months.
There are several talks in the market about a strong possibility of China reversing its ban on recycling foreign vessels. At the time the ban came into force i.e. the year 2018, China was the 4th largest ship breaking nation in the world. This ban had enormous effect on the ship breaking yards of China who had to solely rely on the domestic tonnage for their business. Most of the Chinese yards comply with HKC and IHM requirements and some may now be able to apply for EU SRR certification.
A gentle reminder for all EU flagged vessels about the passing of deadline date for meeting IHM requirements. All EU flagged vessels and all non-EU flagged vessels of 500 GT and above, calling at EU ports and anchorages are required to have on-board a complete inventory of hazardous materials (IHM) by 31st December 2020. Even though there is a temporary qualified extension of 6 months(i.e. until 30th June 2021), the owner/master will need to provide necessary documents as evidence that all possible measures were taken to get the required certification.
The week on week rise in scrap prices has given an unexpected and long prevailing boom to the recycling market. The demand for tonnage is significantly high and all the three major Subcontinent players i.e. India,Pakistan and Bangladesh are offering competitive prices to lure the ship owners and gather tonnage to meet their domestic demands.
The imported scrap prices have soared further by 7-10% this week, making it a decade high and the Winter season coupled with COVID-19 situation is making the matters worse.
Indian steel prices are at never-before-seen levels with domestic steel prices following international prices. HRC prices around the world are at USD 750/MT,a discount of close to USD 25/MT compared to international market. Construction and infrastructure projects are running at full speed and the demand will continue to be robust for the next few months.
A steel producers’ body has written to Prime Minister Narendra Modi, demanding a ban on iron ore export for six months till the supply side stabilizes for the key raw material. The Indian Steel Association explained the reasons behind increase in steel price and mentioned about the issues related to iron ore,price rise of raw materials, shortage in global steel supply and lower capacity utilization due to COVID induced disruptions.
Hot-rolled coil prices have increased by 46% to USD 710/MT as compared to USD 510/MT in July this year. Rebar TMT, which is used in the housing and construction sectors, had touched USD 685/MT.
After a short break last week, the recyclers of Bangladesh are again back in the market bidding aggressively for the available tonnage. The prices being offered are still headed in the range of USD 410-440/MT and are believed to stay the same in coming week also.
The price of HMS has increased by USD 19/MT this week and is currently trading at USD 465/MT; whereas the price of Shredded has increased by USD 45/MT this week and is currently trading at USD 476/MT.
India has offered Bangladesh shippers the use of its seaports for export and import trade to third countries. Bangladesh’s traditional container supply chain typically sees export and import containers transhipped via regional hubs, using feeder vessels, but many of the hubs are facing severe congestion, delays and increased operational costs.
President of Chittagong Chambers of Commerce and Industry Mahbubul Alam said the congestion at hub ports was pushing freight rates up, increasing the price of goods and pressure on consumers.
The coronavirus death toll is now standing at 7,559 with 28 new fatalities in the past 24 hours.
The rise in Steel prices has given strong boost to the prices being offered for the available tonnage. The shipbreakers are impatiently waiting to grab any kind of tonnage that is being put on offer.
The price of HMS has increased by USD 25/MT this week and is currently trading at USD 441/MT; whereas the price of Shredded has increased by USD 32/MT this week and is currently trading at USD 470/MT.
A major steel mill has announced that due to the high price volatility of imported raw materials, any order placed from December 22nd onwards will be booked only on the basis of completion of previously booked orders, if any, and on the then prevailing company announced rates.
Due to continuous increase in the raw material prices,the booking rates of Rebars have been increased by USD 43/MT from 29th December 2020.
The new ex-factory booking rates are USD 841/ MT(Deform) and USD 835 /MT Xtreme Rebars.
Pakistan extended the ban on flights from UK by another week after 3 confirmed cases of new variant of Coronavirus.
The coronavirus death toll has crossed the 10,000 mark in Pakistan on 30th December with 55 new fatalities in the past 24 hours. The Government has decided to initially purchase 1.2 million doses of vaccine from the Chinese company Sinopharm, which will be provided free of cost to frontline workers in the first quarter of 2021.
No new vessel has arrived in Aliaga this week.
Local prices in Turkey went up by USD 10-15/MT this week and are currently at USD 625-630/MT ex works.
Import scrap price has increased by USD 5-10/MT in this week and has set record value of the decade.
The European Commission’s probe into imports of Turkish hot-rolled coil (HRC) has found that dumping has occurred and it is now intending to impose duties in the range of 4.8 – 7.6 pc.
The Commission’s move is likely to dampen the market, at a time when prices in Turkey have been shooting up amid strong demand from domestic re-rollers. The EU has been the main market for Turkish mills, but volumes have been falling since the investigation began and safeguard measures were introduced.
The Central Bank of Turkey raised its one-week repo auction rate from 15% to 17% to curb inflation and maintain price stability. This monetary tightening may dampen the economy and curtail demand, but the rate hike was welcomed by the foreign exchange market with the Lira continuing its rise. The continued rise in the Lira indicates that financial markets are still voicing confidence in Turkey’s economic policy.
USD/TL is trading around 7.43 this week.