Pakistan: Mills lower rebar prices on muted demand; imported scrap prices continue to head south

Pakistan’s major mills have lowered their domestic finished steel prices further as demand from end-users is yet to pick up. After revision, fresh offers for G60 rebars are at PKR 210,000/t exw-Punjab ($948/t). However, tradable prices are at PKR 200,000-205,0000/t ($903-926/t) exw-levels.

Pakistan domestic prices

Demand for finished steel has remained subdued as sales have fallen significantly in the last two months, SteelMint learnt from sources. Steel mills are operating at low capacities on demand-supply mismatch which ,in turn, has kept demand for imported scrap subdued.

Imported scrap market muted  

The bearish market trend continued in the imported scrap sector. Buyers and steelmakers maintained silence for yet another week, despite offers continuing to move southward. The liquidity issues, political instability, unstable currency exchange rates, and unsupportive domestic finished steel market remain major issues in a muted market.

Fresh offers for UK-origin shredded scrap in containers are at $420-425/tonne (t) CFR, moving down by around $5/t w-o-w. Additionally, buyers’ bids are lower by $5-10/t as compared to offers. “If the domestic market offers support, the imported scrap market will definitely pick up soon,” said a trader.

Factors behind negative market sentiments

• Pak rupee stable w-o-w against dollar: The continuous depreciation in Pakistan’s national currency PKR has led to a decline in trade activities. However, the PKR was largely steady against the dollar this week. Currently, the PKR is being traded at 221.6. The unstable currency situation kept steelmakers and buyers cautious about booking any fresh slots. 
• Liquidity issue: The stagnant movement in the domestic market is creating a liquidity crunch for many. Steelmakers were under pressure to sell their rebar inventory at lower prices to maintain cash flow and pay all dues.
• Political instability: Pakistan’s political scenario is unstable and beset with problems. The instability is impacting the current market situation and the overall economic conditions 

Outlook

Industry experts are hopeful the market will respond better in the near term on an expected increase in construction activities.