Yesterday Pakistani Rupee (PKR) depreciated again by almost 6%, PKR moved up to 129 against USD which was at 121.6 a day earlier.
In recent conversations with market participants, SteelMint learned that yesterday Pakistan’s currency has depreciated further by around 6% seeking to slow the depletion of its foreign-exchange reserves before a national election in eight days (on 25th July). Since last eight months’ time, Pakistan Rupee has devalued sharply total four times impacting the local steel prices and imported scrap trade activities in the country.
According to Pakistan interbank rate, PKR now stands at 129 against USD which was trading earlier at 121.6. Since December’17 PKR depreciated 23% which was trading at 105-106 levels then.
Local steel prices likely to rise sharply – As an impact of sharp currency devaluation local billet, rebar and domestic scrap prices in Pakistan are likely to move up by PKR 5000-6000/MT (USD 39-47) although activities may remain weak in the domestic market ahead of election activities. Buying activities may get reduced further on high prices and weak demand. Many of the participants have turned panicky owing to ample finish long inventories available in the market and slowdown of construction projects in the country amid ongoing monsoon.
According to sources, average fresh prices for local billet (Bala) are expected to move up sharply to PKR 85,000-87,000/MT as against PKR 80,000/MT presently. Similarly for grade 60 CC billet prices are expected to increase by PKR 5,000-6,000/MT compared to current levels of PKR 85,000/MT (USD 660), ex-plant inclusive of taxes. Domestic scrap prices are expected to reach PKR 62,500-63,500/MT against PKR 57,500/MT levels yesterday.
Rebar prices in Punjab region are assessed at PKR 99,000-100,000/MT, ex-works and in Sindh region rebar prices are at PKR 102,000-103,000/MT levels. All these prices are inclusive of taxes.
Imported scrap offers move down, buyers hesitant – Before yesterdays’ currency devaluation observed, few deals confirmed for Shredded in containers at as low prices as USD 368-370/MT, CFR Qasim levels. These deals were reported for UK and US origin Shredded scrap. While the prices have come down by USD 5-8/MT as against the report of USD 373-375/MT closing last week.
Few deals for HMS scrap from Dubai also concluded at USD 350-352/MT, CFR Qasim against last report of around USD 355/MT, CFR last week.
“Scrap importers have turned silent over the effect of currency devaluation and they are likely to remain hesitant to buy scrap in large volumes amid slowdown in local steel demand, considerable quantities of scrap available in hand and considering increased cost of imported scrap post currency depreciation. Steel demand in local market is weak ahead of national elections and amid monsoon” – shared a source.
Ship cutting market at Gadani region observed first inspections for gas free tankers at local yards after reopening of the market. Political uncertainty may come to an end after newly elected government which can issue funds for infrastructural projects and may work on galvanizing the fundamentals in ship recycling sector. Ship cutting prices moved down at USD 405/LDT for general dry bulk cargo; at USD 435/LDT for containers and USD 425/LDT for tankers on CNF Pakistan basis respectively.
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