The imported scrap market in Pakistan has witnessed less trade in the past one week. Traders and steelmakers are holding back from booking fresh slots, expecting a price correction in the near term. However, on the other hand, suppliers continue to keep offers strong, which has kept trade on the lower side.
Recent offers and deals
- In a recent deal concluded towards the closing of last week, 1,500 tonnes of imported shredded material in containers were booked at $645/t CFR Qasim.
- Another deal was heard to have been concluded for US-origin 2,000 t of shredded at $630-635/t CFR.
- Fresh offers for same material of UK/EU-origin were being quoted at $640-645/t CFR levels, inching down by $5/t against the price recorded last weekend.
- UAE-origin HMS 1 was being offered at $620/t CFR.
Market players expect prices to come down further but trade activities to pick up as the market remained slow in February while March is also moving at a slow pace. Prices have come down considering various factors, such as a slight correction in crude oil prices and decline in China’s rebar futures.
Factors leading to price correction
- Softening in crude oil prices likely to ease freight charges: Global crude oil prices extended losses further, amid talks between Russia and Ukraine and demand concerns. Oil prices, which soared to near-record high levels following Russia’s invasion of Ukraine, have cooled down over the past couple of sessions. On 7 March, Brent hit $139.13 a barrel, the highest since 2008. Currently, the crude oil futures prices cool down to $102/barrel.
Thus, the continuous hike in freight rates is likely to slow down which has impacted demand and supply in the last few weeks.
- Drop in Chinese steel prices turn global sentiments bearish: Steel billets prices in China’s Tangshan fell by RMB 60/t ($9/t) on 14 Mar’22 following a sharp fall in rebar futures. Prices stood at RMB 4,660/t ($732/t), inclusive of 13% VAT. According to data maintained with SteelMint, China’s SHFE rebar futures contract for May’22 delivery closed at RMB 4,695/t ($738/t), witnessing a drop of RMB 222/t ($35/t) against the closing on 11 Mar’22.
Meanwhile, China’s government has ordered people to go into lockdown as it tries to contain a Covid-19 outbreak that has spread to multiple locations. Authorities have had to put around 10 cities and counties under Covid-19 lockdown, including the tech hub of Shenzhen.
- Imported scrap prices edge down in fresh deals: Turkey’s scrap import market moved sideways with limited activity seen recently. A Europe-origin cargo, comprising 25,000 t of HMS (80:20), 5,000 t of shredded, PNS, busheling, and 2,000 t of rails was booked at an average price of $645/t CFR. The booking was done by a steel mill based in the West Marmara region.
Suppliers’ perspective
- Yards likely to keep offers high: Imported scrap prices from yards are still at high levels. Yards are waiting for a clear price direction as Russia’s invasion of Ukraine has changed the market fundamentals. Yet, global scrap prices set a new high, as market driver Turkey remained active in booking fresh bulk cargoes at high prices. Offers from yards continue hover around $645-650/t CFR levels in Pakistan for shredded.
Pakistan mills increase rebar offers further by $44/t last weekend: Mughal Steel, Agha Steel, and Faizan Steel hiked rebar offers today by PKR 8,000/t ($44/t), sources informed. Offers for G-60 rebar (10-12mm) stand at PKR 208,500- 209,000/t exw Punjab ($1,167-1,170/t), including taxes. However, the deals are being concluded at PKR 200,000-202,000/t exw ($/t) basis.
The price hike was triggered due to severe supply chain disruption increasing freight charges, scrap prices as well as the cost of inputs. The steel market is gradually improving as the acceptability from end-users has improved against the previous week.
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