Pakistan: Imported ferrous scrap index rises by $3/t w-o-w; steel market under pressure amid rising operational costs

Pakistan's imported ferrous scrap index rose by a marginal $3/tonne (t) w-o-w amid higher offers from both the UK, ($428-430/t) and the UAE ($432-435/t). Buyers remained active with higher number of inquiries at $410-420/t levels but were cautious amid weak demand from end-users.

Market participants said that UAE-origin inquiries are slow due to increased Customs enforcement on export cargoes not meeting criteria and duties, along with concerns over material quality in some consignments. According to a trade source, inquiries from India and Pakistan, which were previously active, have now slowed down, contributing to increased market pressure.

A local steel mill official stated, "Trade levels are stagnant due to weak sales in the steel sector coupled with rising operational costs. Mills are unable to increase prices of finished and semi-finished products." He further added, "Our production is now at 45-50%, and our import volume has dropped to 5,000-6,000 t/month which were earlier at around 10,000-12,000 t/month. Domestic scrap consumption remains at 3,500-4,000 t/month."

BigMint's assessment of Europe-origin shredded stood at $429/t, up by $3/t w-o-w.

Around 4,500-5,000 t of shredded scrap from the UK and Canada were booked at $410-421/t CFR Qasim in the last seven days.

Domestic market:Billet and rebar prices have been decreasing for the second consecutive week and now stand at PKR 212,500-215,000/t ex-works. Domestic scrap is priced at PKR 152,000-155,000/t, rebar at PKR 252,000-255,000/t exw.

Rebar manufacturers are unwilling to lower prices further. While unofficial prices for rebar are PKR 245,000-250,000/t, the official website lists prices at PKR 255,000-260,000/t for the same grade.

The domestic market remained muted largely due to rainfall and a slowdown in construction activities across the country.

A major trade source informed that rebar prices remain stable, but sales continue to be depressed with no w-o-w improvement. The strike by the All-Pakistan Cement manufacturers Associations is also impacting steel consumption due to delays in cement deliveries to projects.

Market insiders said that trades are happening but at a slower pace. Power rates have increased, pushing the operational costs upwards despite lower selling prices. The rise in power costs is due to devaluation, as power plants rely on imported fuels. On the other hand, the IMF is advising against incurring losses. Political protests over power rates are expected to subside soon, with no anticipated changes in rates.

Outlook

Rising freight rates from the European region, along with increased scrutiny of UAE-origin scrap exports, could impact fresh bookings in the coming days. Steelmakers are likely to adopt a cautious approach or wait for better market conditions before committing to new orders.