Pakistan: Imported Scrap Prices Drop; Market Awaits Budget

SteelMint learned in recent conversations with industry participants that Pakistan’s steel market remained slow in terms of activities after returning from the long Eid holidays over the last week during 3rd-9th June. Also, the country’s budget for this fiscal is expected to be out today. Most of the participants remain optimistic but in the Wait and Watch mode about changes that are expected in the fiscal budget to aid steel industry.

Imported scrap prices fall USD 5-10/MT – SteelMint’s assessment for containerized Shredded 211 scrap from US and UK stands at USD 320-325/MT, CFR Qasim, down USD 5-7/MT against the last week, however, few limited quantity deals reported majorly in the range of USD 318-322/MT, CFR Qasim. Prices have dropped by USD 8-10/MT against the levels that were seen before closing down for Eid holidays.

An assessment of Dubai origin HMS 1 stands unchanged at USD 330-333/MT, CFR as asking rates remained high on still limited supply while South African HMS 1 is being reported at around USD 325-330/MT, CFR Qasim.

Local steel market yet to be turned fully operational – Few steelmakers have resumed activities with improving sentiments in the local steel market, however, shortage of labour who have not returned from Eid holidays yet kept activities majorly subdued or slowly operational.

PKR depreciates against USD again – After recovering back to the levels of 145-146 last week, PKR has devalued again against USD to 151-152 levels today. This keeps the overall market situation uncertain at the moment.

Domestic scrap supply remains low, prices intact – Domestic scrap prices equivalent to Shredded surged to PKR 64,000-64,500/MT (USD 424-428) ex-works inclusive of taxes unchanged against last week. While SteelMint’s assessment of local billet remained at PKR 81,500-82,000/MT (USD 536-539) ex-works.

Rebar sales slow down – Major finish long steelmakers in the country stopped sales of finish products to have more clarity on the budget. Rebar prices in the Northern region remained more or less same at around PKR 100,000-101,000/MT, ex-works (USD 660-667) meanwhile, Southern region rebar average selling prices reported at around PKR 102,000-103,000/MT, ex-works inclusive of local taxes. Leading mills in the country remain optimistic about sharp rise in both demand and prices post budget’s impact.

The Government plans to modify sales tax in the Budget – The federal board of revenue (FBR) has strongly proposed the government to abolish the sales tax special procedure rules. As per reports, adjustable sales tax at rate Rs. 5,600/MT shall be levied for scrap import while local supplies of melting scrap shall be charged the same. However, more clarity is expected only after the declaration of the budget.

SteelMint’s local steel price assessment –

Source: SteelMint Research