- Higher power, logistics costs continue to pressure conversion margins
- Bid-offer gaps persist, limiting deal closures despite firmer sentiment
Imported shredded scrap offers into Pakistan improved by $4-5/t w-o-w to around $378-380/t CFR Qasim, as assessed on 27 January. The EU-origin shredded scrap assessment stood at $376/t CFR Qasim, up by $1/t w-o-w.
However, workable levels were still reported closer to $370-372/t, as buyers remained selective and adopted a cautious wait-and-watch approach amid elevated offer levels.
Market scenario
A Karachi-based rebar manufacturer said price sentiment in the imported scrap market remained firm as offer availability stayed tight, largely due to elevated Turkish scrap prices restricting flows into South Asia. “Sellers are unwilling to soften offers because replacement costs are high, but on our side, rising utility bills, higher steelmaking and transportation costs, and ongoing liquidity pressure continue to limit aggressive import bookings in Pakistan,” the producer noted.
He added that despite these headwinds, the local market has started to show gradual improvement. “Renewed import interest and better buying sentiment are supporting prices, while expectations of fresh infrastructure development–backed by Chinese investment commitments–are lifting confidence across the steel value chain. Improving weather conditions have also helped revive construction activity after a sluggish period.”
Meanwhile, a UAE-based trader said export offers into Pakistan remained firm due to strong domestic demand in the UAE. “Shredded scrap is still quoted at $390-395/t CFR Qasim, HMS 1 at $365-370/t, and sheared HMS at $360-365/t,” the trader said.
He downplayed concerns around VAT uncertainty, stating that “the real issue is that domestic demand within the UAE is high, which is limiting export availability.”
The rebar producer said finished steel prices have provided stronger support this week. “Rebar prices were raised by PKR 5,000/t, which has helped mills stabilise margins,” he said, adding that rebar offers were now heard at PKR 225,000-228,000/t ($804-815/t). Billet prices have also strengthened to PKR 194,000-197,000/t ($693-704/t), reflecting a direct pass-through of higher imported scrap costs. “Billet and rebar offers firmed quickly as overseas scrap prices moved up,” he added.
A Pakistan-based scrap trader said pressure from the import market was already visible in domestic raw material pricing. “Local scrap is currently indicated at PKR 135,000-136,000/t ($483-486/t), supported by tighter availability and firmer finished steel prices,” the trader said.
Recent deals (CFR Qasim):
- Shredded scrap (UAE): 1,000 t at $383/t
- HMS 80:20 (UAE): 250 t at $355/t
- HMS 90:10 (UAE): 3,000 t at $375/t
- Shredded scrap (Europe): 1,500 t at $377/t
- Shredded scrap (Bahrain): 500 t at $383/t
- Deformed rebar scrap (UAE): 150 t at $376/t
Ship-recycling
On the ship-recycling front, Gadani showed tentative signs of recovery. Reduced inflows of Iranian steel products improved sentiment and pricing, while Pakistan’s improved regional price positioning, following weakness in Bangladesh, helped divert some vessels away from Alang. However, recovery remains fragile due to limited vessel availability. Stable fundamentals, a firmer INR near PKR 278, and steel plate prices steady around $587/t provided some support, with recent fixtures expected to gradually improve activity.
Outlook
Imported scrap prices into Pakistan are expected to remain firm, supported by higher global scrap benchmarks and tight European and Middle Eastern scrap availability, while billet and rebar prices may stay mildly bullish amid improving construction activity and cautious, need-based buying.
Leave a Reply