Highlights of the Week

The era of stability is nearing an end as the global economy is confronted with successive shocks, such as geopolitical tensions leading to de globalization, recurring waves of pandemic, rising inflation rates, and a wide range of price fluctuations. Such market conditions add a huge risk factor into every business decision. At the current price levels, recyclers are sceptical if the same price will sustain after the cutting period is over, but an extreme shortage of tonnage available in the recycling market is ensuring a fierce competition between recycling destinations. This week, the offers from Bangladesh have softened by about USD 20/LDT due to falling domestic prices whereas depleting inventory levels have boosted competitive bidding from recyclers in Pakistan. The domestic market in India remains stable, resulting in good buying interest.

Oil prices retreated under USD 100 per barrel this week as the United States is considering a release of about 180 million barrels from its strategic reserves over a period of six months to calm soaring prices.

COVID-induced lockdowns in 20 provinces of China, including Shanghai, the country's commercial hub, threaten to aggravate global supply chain disruptions. While tankers may take a hit due to slowdown in oil consumption during lockdown, containers and dry bulk segment are expected to benefit from tightening tonnage supply caused by port delays.

The Ukrainian government calls on International Marine Insurers to stop all dealings with shipping companies carrying Russian fossil fuels in a bid to reduce cash flowing into Russia from international buyers of its energy.

Market maintains strong momentum

Steel prices in the domestic market are trading at an all-time high leading to good buying interest from the recyclers of Alang. However, market participants anticipate a decline in steel demand in the short term as the rising steel and fuel prices may defer buying activities.

Temporary lockdown in Tangshan, the steel city of China has led to further volatility in global steel prices creating a favorable export market for Indian steel mills. Steel majors are already aggressively targeting the market of Europe, as the shortage of supply from Russia, Ukraine, and China has led to a spike in spot steel prices there.

Market takes a breather

After leading the subcontinent recycling market for quite some time, the end buyers from Bangladesh have slightly retreated as the domestic prices have softened and there is sufficient inventory at the yards.

Some trade associations have requested the major steel mills lower their rebar prices, but the steelmakers are unable to do so due to the higher raw material prices globally.

The trading activities in the domestic market are likely to remain slow as the holy month of Ramadan begins tomorrow, which will result in a reduction in banking hours and working hours across the country.

Scarcity of tonnage in recycling yards

The recyclers from Pakistan are offering aggressively due to an abrupt drop in inventory levels of the recycling yards while the overall market sentiments remain low due to the ongoing political instability, upcoming holiday period and a dramatic devaluation of the currency.

Leading steel mills raised rebar prices by about USD 35/MT this week, another sharp price hike pushing rebar prices to an all-time high of USD 1170/MT, which is having an adverse effect on the end-user industries, especially construction sector.

The Pakistani Rupee plummeted to a historic low of PKR 184.62/USD after the State Bank of Pakistan reported a major outflow in the wake of paying off Chinese loans. The political crisis in Pakistan has also prompted a significant withdrawal of foreign investment from the domestic bond market, further weakening the currency.

Market remains stable

Two small units under 2,000 LWT have arrived in Aliaga this week.

Imported scrap prices have softened by USD 4 this week while the domestic scrap prices remained stable.

Russia has approved an almost three-fold hike in the export duty on ferrous scrap to support domestic raw material availability, which will be introduced from 1st May’22 for three months. This will impact the margins of steel mills in Turkey as the price of raw materials will increase substantially.

Turkish Lira has remained stable this week, currently trading at TL 14.69/USD.