Highlights of the Week

The ongoing war in Ukraine and widespread lockdowns in China have altered trade flows, thereby leading to an increase in ocean freight rates. The Tanker segment, which has been the major contributor to the recycling market since the pandemic, is now seeing steady freight rates as oil buyers replenish inventories and IEA’s 31 member nations plan to release 120 million barrels from their emergency oil reserves. On the other hand, the falling yen is encouraging Japanese owners to consider recycling their aging assets to benefit from dollar-denominated ship sales. While the supply side will be impacted by the above factors and changing market dynamics, the buying activity in the recycling market remains positive with attractive offers coming from Pakistan and India while Bangladesh slightly lags behind these two markets in terms of prices being offered.

Oil prices experienced intense volatility and fluctuated repeatedly over and below USD 100 per barrel this week as hawkish signals from the U.S. Federal Reserve raised the prospect of restrained economic growth while millions of barrels of crude from strategic reserves are released into the market.

Inflation in several countries across the globe is reaching historic highs in response to the rising gas and oil prices. The Federal Reserve signalled its plans to increase key U.S. interest rate by half-percentage-point steps at upcoming meetings if inflation remains high or gets worse.

23 cities in China are currently under total or partial lockdown with no clear end in sight. The lockdown in Shanghai which was supposed to end on Tuesday has been extended indefinitely until further announcement.

Market maintains strong momentum

The demand for tonnage remains strong in India with stable domestic and export steel market but the buying capacity of several recycling yards have been impacted by the elevated prices which require increased bank limits. Very few yards have access to such limits and are able to bid for large sized tonnages in the market.

The ongoing heated steel prices are pushing end-users like infrastructure and automotive to the sidelines and they have scaled back purchasing by 30-40%. Prices are expected to remain firm in April due to high quantity of export orders in hand but may see a gradual decline in May.

Market takes a breather

The offer prices from recyclers of Bangladesh for securing tonnage have taken a beat as the buying orders from steel mills have significantly reduced. Due to high raw material prices and low finished products demand, the mills are only buying to meet urgent needs and are waiting to get clear direction before placing more orders.

The construction activities have slowed down to a great extent due to increasing prices, adversely affecting the demand of rebar. However, major mills have been keeping their rebar offers firm.

As the Japanese Yen weakened against the dollar, many mills are showing interest towards Japanese materials to meet their requirements.

Leading the subcontinent market

The offer prices from recyclers of Pakistan are currently leading the price board in the subcontinent market as the shortage of stock in the yards have driven demand to secure tonnage available in the demolition market.

In the wake of escalating import bill, the State Bank of Pakistan has decided to impose a 100% Cash margin on 177 imported products, which includes Flat steel, Hot rolled and Cold rolled steel products. This firefighting measure is expected to discourage imports of these items and thus support the balance of payments.

The Pakistani Rupee has surpassed all records this week by trading at an historic low of 190 against U.S. dollar and the Central bank raised the key interest rate by 250 basis points to 12.25% in the biggest hike in three decades. PKR bounced back to 186 after Supreme Court nullified ruling against no-confidence motion

Demand remains stable

Two cruise vessels have arrived in Aliaga this week.

Domestic demand remained low during the week due to the local market’s inability to adjust to the elevated levels.

Lira remained stable with no significant change throughout the week. It is currently trading at TL 14.76/USD.

Turkish inflation is galloping towards a fresh 20-year high, leaving the lira increasingly vulnerable as the nation’s lose monetary policy is out of sync with the tightening monetary policy worldwide.