Inflated local prices for billet and rebar in Pakistan has supported scrap importers to remain active for bookings.
As per recent conversations with market participants, SteelMint learned that Pakistan scrap market remained heated up this week over two major dynamics, the first, successively rising billet and finish steel prices in the local markets and another, low stocks available with small-scale importers. Optimistic sentiments about the market which usually turns active after Ramadan holidays has encouraged small-scale scrap importers to increase their restocking activities.
The price assessment for Shredded scrap from USA and UK remain stable W-o-W at USD 388-393/MT, CFR Port Qasim. Offers for HMS 1 scrap from UAE stood at around USD 382-385/MT, CFR Qasim.
In recent trade deals confirmed, around 1000-1500 MT Shredded 211 from UK sold at USD 391-393/MT, CFR Qasim. Buyers have also booked around 2000 MT Shredded in containers earlier from Europe and USA in the range of USD 388-390/MT, CFR.
According to sources, scrap inventories with large steelmakers seem sufficient. On the other hand, the stocks with small-scale buyers are very low. The small-scale buyers who had not purchased scrap in good quantities since last 3-4 months were working with very low inventories who have now turned active and a lot of containerized scrap have been booked since last two weeks.
Local steel prices in Pakistan increase further – Pakistan steel market remained less working on account of holidays for Labor Day and Shab-e-Miraj in the beginning of this week. However, after the announcement of an increase in sales tax and power tariffs in budget ’18, finish steel prices increased sharply in Pakistan.
Pakistan local market is on uptrend amid active demand for prime quality billets. Current average prices for local billet (Bala) assessed at around PKR 76,000-76,500/MT (USD 657-661) and grade 60 CC billet assessed at around PKR 82,000-82,500/MT (USD 709-713), ex-plant in Pakistan inclusive of taxes. Also, local scrap prices in Punjab region assessed at around PKR 57,500-58,000/MT (USD 497-501) in Pakistan.
Following which, rebar prices in Punjab and Sindh regions have also increased by PKR 1500-2000/MT on W-o-W. Rebar prices assessed at PKR 94,500-95,000/MT (USD 816-820), ex-works in Punjab region inclusive of taxes.
Commodity wise Pakistan local steel reference prices –
| Prices in PKR/MT, Ex work Punjab, (including taxes) | |||
| Commodity | Today (03/05/2018) | A week ago (26/04/2018) | W-o-W |
| Local Scrap | 57,500-58,000 | 57,000-57,500 | +500 |
| Bala(Local Billet) | 76,000-76,500 | 74,000-74,500 | +2000 |
| CC Billet (Grade 60) | 82,000-82,500 | 80,000-80,500 | +2000 |
| Rebar (Grade 60) | 94,000-95,000 | 92,500-93,000 | +1500 |
Source: SteelMint Research
Participants remain more optimistic towards international markets as local prices are at par with an international market. Amid boosted sentiments in local markets importers are likely to remain active for booking scrap in ongoing and upcoming weeks.
No major price difference noticed after tankers allowance in ship cutting market – Pakistan government allowed tankers imports for ship cutting operations after almost one and half year. Gadani ship cutting market witnessed its first oil tanker sold the same week after reopening of the market. Tanker ALEXIA 2 (13,734 LDT) was concluded from Greek owners at decent price USD 458/LDT.
Despite expectations for price rise from yard owners, no major difference was witnessed in the prices. Ship breaking market observed improving sentiments as other Asian competitors are less working at the moment. Current prices assessed for general dry bulk cargo at USD 440/LDT for containers at USD 460/LDT and for tankers at USD 450/LDT on CNF Pakistan basis. These prices have improved USD 15/LDT W-o-W.
Upcoming steel capacity expansions in Pakistan – Large-scale producers like International Steel, Amreli Steel, Aisha Steel, Dost Steel and Mughal Steel are actively investing in capacity expansions in the country. They have proposed an investments worth around USD 112 million which will lead cumulative capacity expansion of 53% this year in Pakistan. Domestic manufacturers have started integrating their operations vertically to benefit from economies of scale and lower tax levis while big players are eyeing for introducing new products to cater the diverse needs of various upcoming infrastructural projects.
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