The imported scrap market in Pakistan remained gloomy. However, prices are slightly lower compared to the previous week, SteelMint learnt from reliable sources. Market sentiments remained unsupportive.
Additionally, the ease of the LCs issue has improved trade activities last weekend in small quantities. Meanwhile, market players are expecting prices to lower further, due to low demand from end-users coupled with the approaching Ramadan month.
SteelMint’s assessment for imported shredded scrap in containers is $490/t CFR. It inched down w-o-w.
“Market is unpredictable, a clear picture may arise only after Ramadan month as slow market activities continue during the month,” said a reliable source.
Further, the government is likely to give top priority to the steel sector’s products by allowing the opening of letters of credit (LCs) for the import of scrap and other steel-related items. Finished steel products are used in the construction industry, for which the local manufacturers of steel are importing steel scrap. Therefore, their issues regarding the import of scrap, i.e., the opening of LCs, may be considered favourable, as per a media report.
Rupee weakens further vs dollar: The rupee remained under pressure on Monday in both interbank and open markets against the US dollar, mainly due to uncertainties linked with the revival of the IMF programme. The State Bank of Pakistan reported that the dollar price appreciated to PKR 281.7.
PKR 278.6 = $1 is the current exchange rate.
Domestic market is yet to improve
- Rebars prices inch down: The country’s domestic steel market continued to move at a slow pace. Deals are happening in low quantity, due to a liquidity issue. Mills are now trading at low prices due to slow demand. Some mills have also lowered their rebars prices.
Currently, deals for deformed grade 60 rebars (10-12 mm) concluded at PKR 285,000-290,000/t exw ($1010-1028/t) including taxes. However, some mills offered rebars at around PKR 290,000-295,000/t ($1028-1046/t), including substantial discounts.
Additionally, prices for local scrap (equivalent to shredded) remained high, at PKR 190,000- 200,000/t ($674-709/t) exy-Punjab, due to material shortages.
- Auto sales drop: Dark clouds continued to hover over the auto sector as overall sales of cars, vans, pickups, and light commercial vehicles (LCVs) posted a 73% y-o-y drop in February to 5,762 units, which is the lowest monthly sales number after 4,500 units in May 2020.
Auto sales have plummeted due to the non-availability of completely knocked down (CKD) kits, LC issues, plant shutdowns, escalating car prices, expensive auto financing, and the low purchasing power of consumers.
Outlook: Market participants are cautious as the industry needs time to pick up. On the other hand, the upcoming Ramadan month will again slow down trade activities. Imported scrap prices may not sustain this much high, experts remarked.
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