Pakistan: Finished steel prices yet to match up with rising imported scrap cost

Pakistan’s imported scrap offers have rallied further following the global uptrend but local mills are finding it tough to pass it on to their finished steel users. Imported scrap prices in Pakistan have hit a record high, as per data maintained with SteelMint since Jul’16.

SteelMint’s assessment for imported shredded 211 scrap in containers from UK/Europe stands at $428/t CFR Qasim, moving up significantly by $28/t as compared to the beginning of last week. Limited deals were reported at high offers as smaller mills turned cautious for placing fresh bookings. Notably, only bigger mills are actively buying imported scrap at the moment.

“Imported scrap price rally has resulted in lower capacity utilization by smaller steel mills In Pakistan and they may now be interested to buy billets rather than buying imported scrap”, SteelMint learned from its reliable sources.

Recent deals and offers-

• Fresh offers for UK /EU origin shredded were reported at around $430-440/t CFR Qasim level.
• Few lots of 500t containerized shredded were booked at $425/t CFR from UK/Europe yesterday
• A 1,000 t of Australian origin containerized shredded scrap has been booked last week at $408/t CFR Qasim
• Furthermore, towards the closing of the last week around 3,000 t of shredded has been sold at $407-410/t CFR Qasim level.
• Current PNS offers are being quoted at $425/t CFR for UK origin and $395-400/t CFR Qasim for UAE origin.

“Large mills have raised their deformed bar offers this week amid a hike in imported scrap prices, however, finished steel prices need to increase further to justify such high scrap prices”, said a participant from a major Pakistan based mill.

Domestic steel prices up – Deformed bar G-60 grade prices have increased by PKR 10,000/ t in the last one month. However, Bala billet price remained depressed and has dropped further this week, as most of the mills in Punjab and other regions have stopped their production due to a shortage of scrap, highlighted market participants.

Pakistan domestic steel prices as on 14th Dec’20

Outlook– Pakistan’s buyers remain cautious to place fresh bookings, as the finished steel market sentiments turn bearish in winter season. However, imported scrap offers are less likely to come down considering today’s Turkish deal getting concluded at $20 above last week’s price.