- Persistent container shortages to support import prices
- Tax changes and transport issues keep buying selective
Pakistan’s imported shredded scrap market strengthened during the week, with offers rising to $420-422/t CFR Port Qasim from $415-417/t previously, while premium-yard material was offered at $425/t and above. Deals were heard at $413-417/t CFR, and BigMint assessed shredded scrap at $417/t CFR Port Qasim, up $2/t w-o-w.
UK-origin HMS 80:20 was offered at $390-395/t CFR, while Middle East-origin sheared HMS was reportedly booked at $405-410/t CFR. However, buyer resistance remained evident, with bids for containerised UK origin-shredded scrap heard at $410-412/t CFR, keeping a gap between seller offers and achievable transaction levels.
Market scenario
Market participants attributed the increase to tighter scrap collection and container availability. A trader said, “Demand is good, while offers are rising because of collection and container shortages. Acceptance is coming through, but offers are limited.” Offers were also heard above $420/t CFR, indicating firmer seller expectations.
UK-origin scrap offers also remained firm, with material offered at GBP 255-260/t ($345-352/t) exw. The stronger GBP exchange rate increased the cost of UK-origin material, while freight rose by around $5/t, adding further pressure on delivered prices.
A UK-based trader said, “Container availability remains a concern, particularly for Pakistan, while higher freight is adding to delivered costs. If equipment shortages persist, imported scrap prices could move higher as buyers face difficulties securing fresh cargoes.”
As per a Karachi-based steel mill source, UAE-origin supply is expected to remain limited until October, although informal offers to Pakistan are still being heard. The latest premium UAE-origin shredded scrap offers were reported at around $430/t CFR Port Qasim and are expected to remain firm.
Domestic market
Mills’ operating rates remain subdued at 35-40%, keeping scrap procurement largely need-based. Local scrap prices are holding at PKR 138,000-140,000/t ($498-505/t), while high electricity costs and flood-related transport disruptions are limiting buying appetite and material movement.
Billet prices stand at PKR 216,000-218,000/t ($779-786/t) and rebar at PKR 234,000-236,000/t ($843-851/t) EXW, leaving mills with limited room to absorb higher input costs.
Meanwhile, the revised electricity-linked sales tax of PKR 5-35/unit is creating a cost gap between mills. Those eligible for the PKR 5/unit rate may have a stronger incentive to use imported scrap, particularly if domestic scrap remains expensive on an effective cost basis.
Outlook
Imported scrap prices are expected to remain firm in the coming week, as limited collection, tight container availability, higher freight and elevated UK-origin replacement costs continue to support delivered prices. However, subdued mill operations, flood-related logistics disruptions and revised electricity-linked taxation are likely to keep buying selective.
Persistent container constraints could add $5-6/t to imported scrap prices this week, with a potential increase of up to $10/t if equipment availability does not improve. For mills, the extent of any price increase will depend on whether higher landed scrap costs can be absorbed amid still-weak finished-steel demand.
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