Pakistan’s domestic steel market sentiments continued to remain robust for yet another week. Major steel mills continued to lift their rebar offers by around PKR 4,000-5,000/tonne (t) ($23-29/t), SteelMint learnt from sources. A sharp increase in input costs, currency depreciation and recent changes in the sales tax structure in the country remained the major factors behind the increase in rebar offers.
Revised offers for G-60 (10-12mm) rebar are at PKR 191,000-195,000/t exw ($1,089-1,117/t), including taxes. Notably, this is the mills’ second price hike in Nov’21. Earlier, a hike of PKR 5,000/t was seen towards the beginning of Nov’21.
Sales tax on steel products revised
Pakistan’s Federal Board of Revenue (FBR) has revised the sales tax structure on steel products through a statutory regulatory order (SRO) 985 against a notification published by SteelMint on 5 Aug’21. The value of steel bars and other long products is now raised to PKR 153,000/t ($882/t) and steel scrap at PKR 119,000/t ($687/t).
PKR losses value further against $: The Pakistani rupee continued depreciate against the dollar to PKR 175.32 in the currency exchange market. It has fallen sharply from the previous week’s PKR 171.3 levels.
However, finished steel demand has become slow due to high rebar prices and smog in the northern region, cited sources.
Meanwhile, commercial and non-standard rebar sales have improved due to huge price gap with the G60 grade , highlighted sources.
Imported scrap prices firm: Imported scrap offers to Pakistan remained firm at $560-565/t CFR levels. Despite the high offers many deals were heard concluded from Pakistani steel mills, restocking actively for winter. However, demand from end-users remained slow during winter, owing to heavy smog.
Around 10,000 t of imported shredded have been booked from UK/EU at $555-560/t CFR Qasim basis. But the offers were still on the higher side, SteelMint learnt from market sources.
Outlook
Pakistan-based steel mills seem to be awaiting clarity on looming EU scrap export restrictions which are expected to be announced on 17 Nov’21. However, prices are less likely to fall sharply in the near term amid limited availability in winter.
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