In a major relief to all steelmakers in Pakistan, the central govt in its notification on 9th May ‘20, allowed all steel mills in all provinces including Punjab and Sindh, to resume operations from 11th May ’20, that is from yesterday. Earlier, only KPK province steel mills were exempted from late April, and very few mills in Punjab region had received a special permission to operate from 1st May, while now all mills can commence production.
However, few mills have decided not to open for 10 days and then close again for Ramadan holidays in May last week, and instead have decided to directly open after Ramadan. Hence on an overall basis, there will be a steel shortage in the market, with steelmakers who have previous unsold inventory looking to take advantage of the same and sell at premium.
Although in comparison to last week, prices have come down, however, finished steel prices are still at least PKR 5,000-6000/MT higher than the levels witnessed in March 3rd week, when the mills had shut down amid lockdown. G60 grade Deformed bars are being offered at PKR 112,000-113,000/MT ex plant in Punjab and PKR 113,000-114,000/MT ex Plant in Karachi region.
The high steel prices due to supply shortage, has assisted the steelmakers to be able to book imported scrap at increasing global prices. In spite of continuously rising offers, bookings for imported shredded scrap have remained decent, and average buying is expected in the following week, before the Ramadan slowdown.
SteelMint’s assessment for containerized Shredded scrap from UK/Europe stands at USD 272-275/MT CFR Qasim, with fresh offers from most suppliers being around this level. This is at least around USD 5/MT higher than bookings last week’s report. In the recent few days, shredded via containers have been booked at around USD 272-273/MT CFR, while not much trade has happened as of yet on the fresh USD 275/MT CFR price level.
In spite of upcoming Ramadan, buyers may look to secure some material before expected supply tightness at global level drives prices higher in the coming weeks.
| Average Offer Prices) | Assessment on 12 May’20 | Last Assessment on 17 Mar’20 | Change |
| PKR/MT | PKR/MT | PKR | |
| Local Scrap (Equivalent to Shredded) | 66000 | 68000 | -2000 |
| Bala (Local Billet) | 87500 | 87500 | 0 |
| CC Billet (Grade 40) | 93000 | 92500 | 500 |
| CC Billet (Grade 60) | 94000 | 93500 | 500 |
| Deformed bar (G-60), Ex-Punjab/KPK | 112,000-113,000 | 107,000-108,000 | 5000 |
| Deformed bar (G-60), Ex-Sindh (Karachi) | 113,000-114,500 | 108,000-109,500 | 5000 |
Source: SteelMint Research
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