Pakistan: Imported scrap trade picks up, offers rise tracking Turkey’s trend

Imported scrap trade has improved slightly this week in Pakistan with a couple of deals getting concluded. Buyers and steelmakers have procured some material at $400–405/t CFR levels. However, due to the gloomy finished steel market, some mills are hesitant to book any new slots.

Imported scrap prices have risen w-o-w following the recent agreement by Turkish mills.

• Offers for UK/Europe-origin shredded scrap in containers stand at $410-415/t CFR, up by $7/t d-o-d basis, however price slightly come down further on weekly basis.
• Approximately 1,500 t of UK/EU-origin shredded was booked at a price of $410-415/t CFR Qasim.

“The market is likely to remain glommy until January as the Christmas holidays are falling next month,” a steelmaker said.

Market drivers

• Global scrap prices rise slightly: Turkiye’s ferrous scrap prices rose slightly in a recently concluded deal for European-origin material. A Mediterranean region-based mill booked HMS (80:20) at $342/t CFR Turkiye, SteelMint learnt from sources. The bulk cargo booking is for December shipments.
• PKR falls against USD: Pakistan’s national currency, the rupee, maintained its downward trend against the US dollar. As per the State Bank of Pakistan (SBP), the rupee closed at 224.3 against $. Concerns about rising domestic political noise and declining foreign exchange reserves weighed on the rupee last weekend.
• Ferrous scrap imports largely stable m-o-m in October: Pakistan, South Asia’s major ferrous scrap buyer, imported 215,351 t in October 2022 as against 214,435 t in August, a negligible increase by 0.5% m-o-m, as per customs data. The total volume imported by the country in the January-October 22 period was 2.54 mnt, a decline of 22% compared to the corresponding period last year.

Unfavourable domestic market

• Liquidity problem towards month end: All outstanding electricity bills are due during the last ten days of each month. Hence, major steel mills are in trouble due to liquidity issues in the market and are under pressure to sell rebar at lower prices to manage cash flow.
• Steel mills lower rebar prices by PKR 4,000/t ($18/t): Mughal Steel, Pakistan’s major steel company, revised rebar prices for the second time this month, effective 21 November. Prices were previously revised on 4 November. The company reduced its supreme and G-60 grades prices by PKR 4,000/t owing to weak demand in the domestic market.

Offers for G60 rebars are at PKR 205,000–210,000/t exw-Punjab ($924-946/t). However, tradable prices are at PKR 200,000–205,000/t ($901–924/t) exw.

• Local scrap prices up further: Local scrap (equivalent- shredded scrap) prices also moved up to PKR 125,000–130,000/t, exy-Punjab, up by PKR 5,000/t w-o-w. Market participants are expecting further hikes in the coming days due to material scarcity.

Pakistan domestic prices

Outlook: The market is expected to remain bearish in the next month, according to industry experts. The finished market hasn’t yet picked up and prices continue to drop.