Pakistan: Imported scrap trade likely to pick up next week on lower inventories

The Pakistan imported scrap market remained mostly quiet this week, owing to liquidity issues, it being the month-end. Moreover, traditionally, limited offers are received during the winter holidays in major supplying countries like USA, UK, and EU.

Limited trade was observed in the last couple of days.

• SteelMint’s assessment for shredded scrap imports into Pakistan stands at $530/t CFR, lower by $4/t w-o-w. Limited deals were heard.
• Around 3,000-4,000 t of UK/EU-origin shredded scrap in containers was booked at $530-535/t CFR Port Qasim, last weekend.
• Around 10,000 t of UAE-origin HMS 1 have been booked by major steel mills at $480-485/t CFR basis.

The Pakistani rupee (PKR) witnessed stability this week after a continued downtrend for the last couple of weeks. Currently, the Pakistani rupee is trading at 178.5 levels against 177.9 recorded last week against the dollar.

 Reasons behind slow market

• Less demand for finished steel: The finished steel market in the northern region has been closed from the beginning of the month in accordance with a government notification. On the other hand, bad weather and spells of heavy rains in Punjab and Karachi region affected the market and slowed down construction activities. Domestic rebar offers for G-60 (10-12mm) grade are at PKR 189,000-190,000/t exw ($1,058-1064/t), including taxes. But deals are happening at lower levels of PKR 185,000-187,000/t exw ($1,036-1047/t).  

•  Preference increase for non-branded rebars:  The non-graded rebar offer is at PKR 162,000-163,000/t exw and its rate difference with G-60 is PKR 30,000/t exw. Few contractors and builders have shifted to commercial rebars in replacement of G-60.
•  Liquidity issue during month-end: Pending electricity bills are required to be paid in the last ten days of every month. Hence, major steel mills face liquidity issues. The market is likely to regain momentum from the first week of Jan’22.  

Outlook

The scrap market may regain momentum in a week’s time given the lower scrap inventories with mills. Market sources expect prices to remain firm.