- Shredded offers may see another $3-4/t correction
- Mills favour imports for affordability, lower taxes
Imported shredded scrap prices slid w-o-w in Pakistan, with workable prices at $378-380/t CFR Qasim. Market sentiment softened as buyers turned less aggressive, with expectations of another $3-4/t correction in offers amid weak demand.
BigMint assessed European/UK-origin shredded at $379/t CFR Qasim, inching down by $1/t w-o-w. The latest shipment was UK-origin shredded at $382/t (near arrival, 500 t).
Inquiries for UK-origin shredded remained lower at $375-376/t CFR, with the UAE-origin HMS/PNS mix available at $370-375/t CFR. UAE scrap inquiries also dipped, weighed down by Pakistan’s liquidity crunch and the monsoon slowdown.
Speculation over an interest rate cut is building in the market, while domestic prices remained stagnant to weak. Finished steel prices were down, and mills waited for a post-monsoon demand recovery.
In the domestic market, rebars were at PKR 230,000-235,000/t ($812-830/t) and billets at PKR 200,000-202,000/t ($706-713/t). Local scrap dropped to below PKR 140,000/t ($495/t) from PKR 145,000/t, while costs of imported material ranged lower, at around PKR 128,000-130,000/t ($452-459/t) on a delivered basis, putting further pressure on local prices.
Mills increased imports, as they were both cheaper and tax-efficient. Local scrap had long traded at a premium, supported by demand from tax-exempt regions, but stricter enforcement to curb the movement of finished steel from non-taxed to taxed areas reduced this demand.
As per market insiders, the impacted non-taxed market is estimated at around 0.5 million tonnes (mnt).
Outlook
Pakistan’s scrap market is likely to face further downside in the near term. A clearer recovery in buying appetite may only emerge post-monsoon, provided construction activity picks up and political-economic stability supports steel demand.
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