Imported scrap prices have skyrocketed to a six-month high in Pakistan. However, market sentiment remained bearish. Imported scrap prices have increased significantly by around $30/t in the last one month (February) amid active buying by Turkish steel mills, resulting in a six-month high price level.
SteelMint’s assessment for imported shredded scrap in containers is $485-490/t CFR, rising by $15/t w-o-w.
Meanwhile, Pakistani scrap buyers are still unable to procure any fresh material due to an acute liquidity crunch owing to the country’s prolonged financial constraints.
Rupee’s temporary recovery: From an all-time low of PKR 276.58 against the US dollar at the beginning of the month on 3 February, the rupee gradually rose to 257.1 on 28 February. This happened amid crippling import restrictions remaining in place.
Most tariff restrictions on imports (higher import duties and additional levies) are expected to be imposed in April. That is what Pakistan has told the International Monetary Fund (IMF) during its recent talks. However, once these restrictions are lifted and letters of credits (LCs) become relatively easier to open, imports will rise, as per reports.
Domestic prices remain high
Pakistani steel major Faizan Steel has announced the closing of sales and bookings of finished steel (rebars) due to an unexpected shortage of raw materials and the non-opening of LCs. Other mills may halt sales in the near term.
Currently, deals for deformed grade 60 rebars (10-12 mm) concluded at PKR 290,000-295,000/t exw ($1,109-1,128/t) including taxes. However, some mills offered rebars at around PKR 300,000-305,000/t, including substantial discounts.
Fresh offers for local scrap (equivalent to shredded) are at PKR 194,000-196,000/t ($742-750/t) exy-Punjab.
Power minister says an immediate tariff hike needed for IMF deal
The power minister said that the pending dues on account of fuel cost adjustments in June and July last year, postponed due to floods, would be recovered. Meanwhile, a financing cost surcharge would be imposed on consumers using over 300 units to finance debt parked against power holding companies. In addition, an additional surcharge of PKR 3.82 per unit would be imposed on those using more than 300 units.
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