Pakistan: Imported scrap market sluggish on weak finished steel sales, Ramadan holidays

Pakistan’s imported scrap trade remained slow for yet another week of the holy month of Ramadan on limited demand from end-users. However, a few bookings in small quantities continued to happen. Meanwhile, imported scrap offers corrected slightly as buyers were reluctant in making fresh bookings amid high finished steel inventory.

• In a recent deal, around 3,000 t of UK-origin shredded in containers have been booked at $648-650/t, CFR PQ levels.
• Fresh offers are being quoted at $650-655/t CFR levels, down further by $5/t w-o-w.

On the other hand, market participants mostly preferred domestic scrap considering cost competitiveness. High quality domestic scrap is available at PKR 128,000-130,000/t exy ($694-704/t) Punjab levels.

Factors behind bearish sentiments –

• PKR weakens further: The national currency, Pakistani rupee (PKR), has continued its downtrend against the dollar. Currently, PKR is trading at 183.10 against 181.78 recorded a week ago.
• Limited cash flow: The last ten days of every month is the electricity billing period and domestic prices have come down to sustain the cash flow during this period. Additionally, National Electric Power Regulatory Authority (Nepra) has released a notice on additional fuel cost adjustment (FCA) of PKR 4.85 per unit to be charged to consumers of ex-WAPDA distribution companies. However, the impact of increased electricity tariff will be seen next month, SteelMint understands.
• Turkish imported scrap buyers retreat: The absence of Turkish buyers in the global scrap market due to Ramadan also remained the major factor which slowed down trade. Other scrap buyers like Pakistan, Bangladesh, and India are waiting for the next round of bookings for a clear price direction.
• Political changes likely to support steel demand: After Shehbaz Sharif was appointed as Prime Minister last week, the government-funded construction projects, which were on hold, are likely to resume soon.
• Rebar sales under pressure: Domestic rebar sales have also slowed down considering the seasonal slow month amid limited working hours and unavailability of workers and subdued demand from end-users. Hence, mills have started selling at a discounted price on high inventory. Pakistan’s leading steel mills kept rebar prices unchanged for another sequential week for G-60 (10-12mm) grade at PKR 216,000/t exw-Punjab ($1,171/t), including taxes. However, tradable prices are at PKR 200,000-204,000/t exw ($1,084-1,106/t). The market will improve after the Eid holidays.

Pakistan domestic prices

On the other hand, domestic billets prices remained supported on the back of high rebar prices, hence, slightly up w-o-w.

Outlook: The market is expected to remain slow for the next 10 days due to Ramadan and will remain close from 29 April-10 May on account of Eid. Trading activities are likely to pick up from mid-May after mills resume scrap bookings actively.