The imported scrap market remained quiet for yet another week as recent currency depreciation kept buyers on the sidelines. Meanwhile, European suppliers are holding offers, waiting for clearer market direction. Yet August cargo shipments are already sold out.
Furthermore, limited offers are available in the market as the winter holidays in the EU slowly approach. So, the bid-offer disparity has kept trade volumes on the lower side.
Imported scrap offers fell further by $15-20/t w-o-w; however, bids are comparatively low. SteelMint’s assessment for UK/EU-origin shredded stands at $455-460/t CFR Qasim.
Rebar prices remain low
Major steel mills in Pakistan namely Agha Steel, Amreli Steels, Faizaan Steel and Ittehad Steel hiked rebar offers by PKR 7,000-10,000/t ($31-44/t) last week, sources informed. Current offers for G-60 rebar (10-12mm) are at PKR 237,000-240,000/t exw-Punjab ($1,051-1,064/t) including taxes.
Pakistan domestic prices
However, the last workable price levels were around PKR 230,000-233,000/t. Prices have increased due to the continuous and unprecedented devaluation of the Pakistani rupee, increase in energy costs, and rising input costs.
The domestic market situation remained mostly unchanged from last week. Weak demand has been seen due to heavy rains in many areas. Domestic mega steel projects and metropolitan construction projects are running at a low pace due to shortage of funds received from the government, which has kept finished steel sentiments low, highlighted a Pakistan-based source.
Factors weighing down market:
- PKR hits record low against USD: The Pakistani rupee (PKR) slipped further against the US dollar in the currency exchange market. The rupee is now trading at 232.87 against the dollar. Countries like Pakistan that import a lot of their raw materials have been hit hard as the price of many of those materials are already at multi-year highs due to the Ukraine-Russia war and extreme weather conditions.
- Political instability impacts construction: Political instability is an issue which impacts construction works, which are moving at a slow pace. After the Punjab by-election, PM Imran Khan will continue to mount pressure on the government to hold immediate general elections. The unpredictable political situation has created volatility in both commodity and financial markets.
- Turkiye’s imported scrap prices fall: Turkiye’s imported scrap prices fell by $10/t in a recent deal concluded from the USA. The cargo comprising 30,000 t HMS 1&2(80:20) and 15,000 t shredded was booked at $360/t and $375/t CFR Turkiye, respectively. The cargo has been booked by an Aegean region-based steel mill.
- Inventories at mills: Pakistan, South Asia’s leading ferrous scrap importer, received 223,819 t of scrap cargoes in June as against 164,699 t in May. Seaborne bookings for June rebounded significantly by 36% m-o-m. In contrast, on y-o-y basis, scrap imports fell 23% compared to 290,412 t in June 2021. Thus, it seems mills have inventories of scrap and hence are awaiting further price cuts before making the next round of purchases.
Outlook: Considering recent Turkish deal’s imported scrap prices are likely to fall further. However, the national currency devaluation is keeping market sentiments negative.
Leave a Reply