Bangladesh: Mills increase rebar prices on high input cost; imported scrap market silent

Despite the limited demand from the downstream sector, Bangladeshi mills increased rebar prices for yet another week. Due to the increased input cost, power outages and production curtailment led to a hike in finished steel products.  

The domestic market struggling with a power outage, and fuel crisis and are forced to stop production in many mini-mills. 

SteelMint assessed domestic rebar prices at BDT 88,000-89,000/t ($834-874/t) exw-Chittagong. However, the secondary mills in Dhaka have increased their rebar offers at BDT 84,000-85,000/t ($816-826/t), up by BDT 1,000/t w-o-w. Major construction activities are yet to pick up except for governmental projects. 

Local scrap prices hit four months high

Furthermore, the domestic ship-breaking scrap prices hit four month high. Currently, the local scrap is being traded at BDT 60,000/t exy basis. The material scarcity in the domestic market kept prices higher. 

Imported scrap buyers opt to wait and watch policy 

The ongoing LC issue kept buyers’ sideline. Banks have set restrictions on opening new LC. Additionally, the national currency value continued to lower which limits the fresh slot bookings, SteelMint understands.

• Indications for containerised offers for UK-origin shredded are at $445-450/t CFR, down $5/t w-o-w.
  
  
• Meanwhile, UK-origin HMS in container is now heard at $415-420/t CFR Chittagong, down $5/t w-o-w.
  
  

Bulk buyers are mostly silent 

• Indicative offers for US-origin bulk HMS (80:20) were heard at $380-390/t CFR, down by $10/t w-o-w. Suppliers are aggressive to sell their material at the earliest possible, owing to the uncertain market. Nevertheless, buyers still waiting for a clear price direction before placing the bid for bulk material. 
  
  
• Meanwhile, no firm indication was heard for Japanese material, as prices continue to move down after the Kanto tender. 
  
  

Market sentiments remain negative

•  LC opening restraint: After six months of growth, the private sector's credit growth slowed from September for several reasons, including tighter LC opening due to volatility in foreign reserves, continued inflation, and the energy crisis in the manufacturing sector. Whereas, the downtrend still going on even after the winter season has started. Sept- Jan months usually remained the peak season for construction activities. 
  
  
• Electricity supply remains limited: Dhaka Electric Supply Company Limited (Desco) has distributed the locations-wise electricity supply that could face an hour of load shedding. Hence the Dhaka mills mostly remained closed on supply shortage. 
  
  
• BDT mostly stable against the dollar w-o-w: The national currency Taka is largely stable this week as compared to last week. Currently, the Taka is being traded at 101.7 against the dollar. 
  
  

Outlook

The market situation is depressed for now as finished steel buyers’ demand remains subdued. The downtrend is likely to continue for the next couple of weeks, despite the lower imported scrap prices, SteelMint understands.