Pakistan: Rebar prices yet to improve; import scrap market still down

Pakistan’s domestic rebar prices have not seen any sharp change this week despite the government commencing a few construction projects in Lahore/Punjab and Islamabad. However, enquiries from end-users remain slow. Fresh offers for G60 rebars are at PKR 205,000-210,000/t exw-Punjab ($924-946/t). However, tradable prices are at PKR 200,000-205,0000/t ($901-924/t) exw.

On the other hand, local scrap prices moved up significantly as mills are procurring domestic material which led to limited scrap availability in the country.

Federal Minister for Science and Technology Agha Hassan Baloch stated that almost half of steel rebars traded in different regions of Pakistan are not meeting the standards of the Pakistan Quality Control and Standard Authority (PSQCA).

“Re-rollable scrap and scrap ship plates must not be directly re-rolled into steel bars. However, many manufacturers are blatantly violating the PSQCA laws/standards by producing sub-standard steel bars by directly rolling plates generated from the shipbreaking industry as well as from imported re-rollable scrap into substandard steel bars,” a report in a renowned Pakistani newspaper read.

Factors behind subdued longs demand

• Steel inventories with mills: With consumption from end-users being slow, inventories with the mills have piled up, resulting in steel mills remaining under pressure to sell their finished steel products at lower prices.
• Mills cut production: Most mills are looking to cut their output as inventories are readily available. “A few mills are planning to reduce their production as sales are not picking up,” said a local steel producer. Steel mills are operating at low capacities on demand-supply mismatch which, in turn, has kept demand for imported scrap subdued.

Pessimistic imported scrap market

Slumping global scrap market sentiments resulted in a decline in Pakistan’s imported scrap market. Mostly in November imported scrap buyers turn active and procure material. However, this year, due to currency depriciation, political instability and limited cash flow, mills are buying domestic material over imported cargoes.

Offers for UK/Europe-origin shredded scrap in containers stand at $415-420/t CFR, a decline of $5/t w-o-w.

Unsupportive market sentiments

• Pak rupee dips w-o-w against dollar: The continuous depreciation in Pakistan’s national currency, PKR, has led to a decline in trades. However, the PKR fell marginally against the dollar this week. Currently, the PKR is being traded at 221.7 against 221.5 last week. Pakistan’s financial situation worsened after floods hit the country.

Outlook
Industry experts believe that the market will rebound soon due to the expected surge in infrastructural activities and it is highly likely that rebar prices will increase.