Ferrous markets in India, Pakistan and Bangladesh are facing complete lockdown scenarios amid a daily increase in the number of COVID-19 cases. A disruption in ferrous scrap markets is now an inevitable reality. India has ordered a 21-day national lockdown of its 1.3bn population, as of March 25. The government has announced extension of deadlines to file income-tax and GST returns from March 31 to June 30.
Earlier, the government had announced lock-downs in 75 specific regions and shut operations in major ferrous-producing states, including Gujarat, Maharashtra, Punjab and Chennai. Along with closures of plant operations at induction furnaces, limited banking operations has impacted traders and steel makers. Most suppliers were rushing to get LCs issued from buyers to avoid financial exposure. Scrap yards in the UK and Europe, too, are shutting down operations. The possibility of payments not being returned after loading, and what will happen to cargoes already at sea once they reach destinations, are issues on which the industry and governments have yet to offer clarity.
India’s apex recycling association body, MRAI urged all shipping lines to support importers in the current COVID-19 scenario, and not charge detention or demurrage. Industry participants are urged to follow the Chinese suit, where all shipping lines waived such charges for the duration of the lockdown in the country. Importers and traders believe the charging of detention and demurrage could cause a bloodbath for the Indian steel industry and economy.
Force majeure at ports
In India, major ports, including Gopalpur and Gangavaram, have invoked the force majeure clause to tackle the situation.
East Asian suppliers and traders based out of Hong-Kong and Singapore are trying to cancel earlier contracts as all container loading activities have been stopped. “Why would anyone buy if there is no end-user demand for finish steel? The country lacks the facilities to handle the situation if it spreads,” said a major steel maker in southern India, requesting anonymity because of the sensitivity of the situation. Buyers are refusing to book any materials at the moment.
Pakistan’s COVID-19 cases at 1,000+
The country announced the closure of all public transport on March 24. Mills remained interested in booking material, booking a few ferrous scrap cargoes earlier in the week. However, buyers are now expected to step back given that a complete nationwide lockdown is now expected.
Bangladesh on lockdown from March 26
Bangladesh was the only country buying ferrous scrap this week with prices losing $5-10/mt every next day, however, the COVID-19 situation has led to a lockdown now from March 26.