Amidst the acute volatility of the final three years, there are few nations which have emerged as tales of regular progress in metal like Bangladesh.
The South Asian nation has change into the US’ third largest export marketplace for metal scrap in 2022, exporting 667,169 tonnes of US scrap within the first 5 months of this 12 months – after solely Turkey and Mexico.
And regardless of protracted issues with Covid-19 final 12 months, Bangladesh’s metal manufacturing nonetheless registered a year-on-year improve of about 16%, whereas its iron scrap imports rose 7%, in response to business estimates. in accordance.
Whereas Sengupta acknowledges the present challenges that Bangladesh is going through corresponding to port issues, energy scarcity and low per capita metal consumption, he expects robust progress in its metal market within the coming few years because the nation Modernization continues.
Metal consumption is growing together with GDP
In response to Sengupta, the one greatest alternative for the Bangladeshi metal sector is to capitalize on the nation’s radical enchancment in infrastructure corresponding to bridges. He stated the per capita metal consumption is at present round 47-48 kg, which must be elevated to round 75 kg within the medium time period.
“Infrastructure is the spine of a rustic’s financial improvement, and metal is the spine of infrastructure. We want plenty of [more] infrastructure in our nation,” Sengupta instructed Fastmarkets.
Infrastructure is the spine of a rustic’s financial improvement, and metal is the spine of infrastructure.
“An vital issue is that Bangladesh is a small nation geographically, however it’s a very densely populated nation, so we have to develop extra communication networks and construct infrastructure like bridges to encourage extra financial exercise,” They stated.
Such tasks can’t be underestimated. The Bangabandhu Bridge, accomplished in 1998, connects the jap and western elements of Bangladesh by street for the primary time. The Padma Multipurpose Bridge, inaugurated in June this 12 months, now connects the south-western a part of the nation with the northern and jap areas.
In response to the World Financial institution, Bangladesh’s GDP is projected to develop by 6.4% this 12 months, adopted by 6.7% in 2023 and 6.9% in 2024.
Sengupta stated metal consumption ought to have grown at an analogous fee and even barely larger over the identical interval.
He stated it’s at present round 8 million tonnes, with lengthy merchandise being 6.5 million tonnes and the remainder being flat merchandise. He stated that the billet capability of the nation is round 5 million tonnes.
The anticipated improve in native demand would require extra steelmaking capability and improve in scrap demand. Main Bangladeshi conglomerates corresponding to Bashundhara Group are investing in new capability, whereas others corresponding to Abul Khair Metal (AKS) are growing their capacities.
Sengupta stated that efficient 2023, BSRM will add 250,000 tonnes of melting capability per 12 months to its Electrical Induction Furnace (EIF)-based steelmaking advanced in Chattogram, previously referred to as Chittagong. It will take the whole melting capability of the corporate to 2.25 million tpy from the present 2 million tpy.
As well as, BSRM is including one other 500,000 tonnes to the rolling capability for the rebar. At current, the corporate has two rolling mills with a complete rebar capability of 1.7 million tonnes, which can attain 2.2 million tonnes in 2023.
He says that with growing capability in Bangladesh and elsewhere, metal scrap provide danger is changing into a significant difficulty within the metal market. He stated Bangladeshi mills could have to seek out new methods to safe their uncooked supplies corresponding to utilizing long-term contracts linked to cost indices.
bulk shopping for growth
Bangladesh has been an more and more common purchaser of bulk scrap cargo in 2022. BSRM is sourcing cargo from Japan, the US and Europe this 12 months.
Bangladesh’s 4 greatest mills have elevated their proportion of bulk purchases this 12 months amid intermittent Turkish purchases, larger container freight expenses and firmer container buy costs from rival markets corresponding to Pakistan.
“Now bulk is cheaper than containerized imports and our imports are principally in bulk. Within the final monetary 12 months, we imported about two million tonnes of scrap and the container consumption was round 20%,” Sengupta instructed Fastmarkets.
He added that BSRM makes use of cut up metal scrap of about 90% in its furnaces, whereas about 10% consists of imported sponge iron.
Sengupta stated the current value change signifies that the general share of bulk purchases in Bangladesh is at present round 70% versus 30% in containers, in comparison with 60% bulk and 40% containers in earlier years.
Fastmarket’s value valuation for Metal Heavy Melting Scrap 1 & 2 (80:20) deep-sea origin imports, Bangladesh averaged $440.20 a tonne in June, whereas HMS 1 & 2 (80:20) valuations for containerized imports , the CFR Bangladesh common was $461 per tonne. , This stored the wholesale value under the container value at $20.80 a tonne.
By comparability, import costs for deep-sea cargo of HMS 1 and a couple of averaged greater than $14.70 per ton for containerized cargo all through 2021.
Requested about BSRM’s greatest problem, Sengupta outlined the issues with delays and price on the Port of Chattogram, which is the one port generally used for importing metal scrap within the nation.
Sengupta lamented that the freight differential between delivery deep-sea scrap cargo from the US West Coast to Bangladesh, in comparison with rival purchaser Vietnam, was traditionally round $10 a tonne, however is now round $20-25 a tonne. Is.
“In the mean time, our nation is shedding some huge cash due to Chattogram [port] Comfort,” he stated. “In the mean time, this overseas change goes in a foreign country, which has not benefited anybody.”
Premium for Fastmarkets Pricing for Metal Scrap HMS 1 & 2 (80:20) Deep-Sea Origin Import Bangladesh CFR on Valuation of Metal Scrap HMS 1 & 2 (80:20), Vietnam up to now averaged $21.63 per Tons. Up from $14.66 per tonne for the entire of 2021.
A metal scrap vendor conversant in exports of bulk cargo to Bangladesh stated the present scrap discharge fee in Chattogram was round 3,200 tonnes per day, excluding weekends and public holidays. On the Indian port of Kandla, the discharge fee for Kata is round 5,000 TPD and for Reduce grade is round 3,500 TPD, however together with each weekends and holidays, the exporter stated.
The exporter stated the longer ready time meant that Bangladeshi patrons must pay a hefty premium over nations like India and Vietnam to safe bulk items.
However many new port tasks are anticipated to return up within the coming years, which is predicted to ease tensions at Chattogram port, Sengupta stated.
A serious deep-sea port below building at Matabari in Cox’s Bazar district of southern Chattogram is “progressing”, Sengupta stated. In response to native media studies, it was anticipated to be operational by the tip of 2025, however confronted hurdles in land acquisition. If operational, the draft would permit bigger cargo ships to dock on the port, quite than anchoring bigger ships and smaller vessels used to hold cargo to shore as in chattograms.
Website improvement work can also be in progress at Halishahar’s Bay Terminal in Chattogram, which can improve the operational capability of Chattogram port and “might be operational in 2026, if all goes effectively,” Sengupta stated.
He added that one other port at Mirsarai may come into operation later relying on the receipt of personal funding.
Port points could stand as one in all Bangladesh’s greatest challenges at present, however Sengupta believes that the nation’s economic system will develop within the years to return from the continuing bold tasks to improve this infrastructure. And there can be additional progress within the metal markets.