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Pakistan: Ferrous scrap import market silent ahead of Eid; LC issue persists

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Melting Scrap

BigMint Bureau

349 Reads

27 Jun 2023, 19:23 IST

Pakistan: Ferrous scrap import market silent ahead of Eid; LC issue persists

Pakistan's imported ferrous scrap trade activities remained muted this week amid the upcoming Eid al-Adha celebrations and letter of credit (LC) issues. Around 2,000-3,000 tonnes (t) of imported shredded scrap were heard to have been booked towards last weekend. According to market sources, deals were finalised within the range of $420-430/t.

"Trading is now on hold until 4 July. Latest local scrap, billet, and rebar offers are at PKR 183,000-185,000/t, PKR 223,000-225,000/t, and PKR 245,000-250,000/t respectively," a Pakistani mill informed.

Current offers for shredded scrap of UK origin are quoted at $420-425/t CFR Qasim, a decrease of $6-8/t w-o-w.

"Due to the festive season and the absence of labourers in the market, there are no sales happening," another Pakistani mill said.

The restrictions on LCs continue to pose significant challenges for the country, as small-volume bookings are not meeting the mills' requirements.

Domestic market silent

Over the past few days, the domestic market has been quiet, primarily due to the Eid festival. Major mills are closed during this period, while some are operating at only 30-40% capacity due to liquidity issues in the domestic market and a lack of demand for finished steel from end users.

At the time of publishing this insight, the Pakistani Rupee (PKR) was trading at 285.21 against the US dollar, appreciating slightly by PKR 2 w-o-w.

Offers for deformed grade 60 rebar (10-12 mm) have decreased by PKR 5,000/t ($18/t) w-o-w to PKR 250,000/t exw ($877/t), inclusive of taxes. Local scrap (shredded) offers remained unchanged w-o-w at PKR 183,000/t exy ($645/t). Local billet offers have also decreased by PKR 5,000/t w-o-w to PKR 225,000/t ($793/t ).

New income tax measures to affect builders

In an effort to revive the International Monetary Fund programme, the government has introduced new taxation measures through Finance Act 2023. Builders and developers will have to pay an advance income tax which will affect their sales. However, these amendments are aimed at raising an additional PKR 215 billion in taxes, thus, stimulating economic growth.

Outlook: Steel demand and buying activity have declined due to the unpredictable economic conditions in the country. Participants are hopeful of a few bookings after the Eid holidays.