Brazil’s Asia steel scrap export route blooms amid renewed trade opportunities

Brazilian sellers have ramped up containerised exports of steel scrap into South Asian markets over the past year but this explosion in export sales is unlikely to be a long-term trend, sources have told Fastmarkets.

Scrap collectors and processors in the country have traditionally sold the vast majority of their stocks in the domestic market, with only the excess being exported. But waning Brazilian demand and decreasing domestic prices since the second half of 2019 have led them to seek buyers further afield.

South American and European nations had been taking a much larger share of Brazilian scrap volumes before 2019 but Bangladesh has become the main destination of Brazil’s scrap exports in the past few years.

Brazilian ferrous scrap exports up 1.7% in June amid tumbling domestic demand
Brazilian ferrous scrap exports increased 1.7% in June, compared to the same month in 2019, due to lower domestic consumption that has led to yards shipping more material to South Asia, data from the country’s ministry of economy showed.

The country exported 76 649 tons of ferrous scrap in May 2020, up from 75 344 tons the year before. Bangladesh, India and Pakistan were the main destinations, accounting for 86% of the volumes. Brazil shipped 24 418 tons to Bangladesh, 21 227 tons to Pakistan and 20 121 tons to India in June 2020, according to the ministry.

Ferrous scrap exports from Brazil totalled 316 145 tons in January-May 2020, up by 63.3% from
193 610 tons in the corresponding period of 2019, according to the data.

Containerised scrap from the country has been offered at very competitive prices to both Bangladesh and India since the start of the year, often enticing mills to opt for Brazilian material over competitors from regions such as the European Union and the United States.

Should Indian demand for scrap continue to rise while mills return to the market following the easing of lockdown restrictions in India, some consumers will find that their traditional suppliers may not be able to fulfil their requirements, and therefore rely on Brazil for this.

The United Arab Emirates, which is the largest supplier of scrap material to India, introduced a four-month scrap export ban from May. The United Kingdom, which is the second largest supplier of material to India, has seen domestic collection rates of scrap fall sharply during its own lockdown period. Combined with a continued shortage of material and strong demand from Turkey, this has pushed up UK prices.