Pakistan: Imported scrap prices fall in recent trades, sharp correction less likely

Imported scrap prices continued to move downward in the recent deals. However, trades are subdued due to Ramadan resulting in limited working hours for the bank.

“I have sold 4,000-5,000 t shredded scrap in containers during the last one week at $458-462/t CFR levels. However, now the bids are coming at $450 levels but no prominent recyclers or yards are ready to offer volumes at such lower bids on expected hike in freight rates. On the other hand, distressed cargoes are creating pressure after Turkey’s deals which came into light recently”, shared a prominent Pakistan-based scrap trader.

SteelMint’s assessment for UK/EU origin containerised shredded stands at $459/t CFR Qasim levels, down further by $5 against last week’s opening.

Recent trades and offers:

• Fresh offers for shredded are now hovering around at $455-460/t CFR Qasim levels, down by a further $5 w-o-w. Few more trades for around 2,500-3,000 t heard to have concluded at $450-455/t levels early this week.
• Offers for Dubai origin HMS1 is now available at $450-455/t CFR Qasim levels

Market is currently stable as active buying was happening recently. However, finished steel market is slow and yet to match with the imported scrap prices SteelMint learnt.

Domestic scrap market slow down on dull finished steel sentiments: An active market insider has highlighted the factors behind the slow market as below-

• Low finished steel sales due to Ramadan month, construction activities have slowed down
• Unable to increase finished steel prices at par with the imported scrap. Local finished products market is not supporting the required rates
• Low rate of local scrap as compared to imported scrap
• COVID lockdown restrictions

Prices for G-60 rebar have sharply fallen by PKR 1,200/t against the beginning of last week. According to SteelMint, G-60 rebar in Punjab region stands at PKR 130,800 /t exw Punjab, offers are also heard at PKR 128,000-131,000/t exw Punjab levels.
Local scrap rate is low as compared to imported scrap and stands at PKR 89,000/t exy Punjab, down by PKR 500/t w-o-w.

Outlook: Market participants expect prices to correct this week, however any sharp price correction looks less likely considering positive outlook & expected hike in freight rates.