Pakistan: Imported ferrous scrap market in slow lane after Eid holidays

Pakistan's imported ferrous scrap market witnessed a slowdown last week due to the Eid holidays, as major mills were closed for festivities. Although the market has reopened, trading activity remains sluggish. Buyers are patiently waiting for the market to regain momentum.

A major mill representative told SteelMint: "Lastest offers were at $418/t. This rate is attractive since before the Eid holidays, local scrap prices were at PKR 178,000/t. Banks have opened, but LC requests are not being entertained as banks await further clarity on the forex scenario. Market signals are expected to emerge clearly within the next two- three days."

On the imports front, offers from Dubai for shredded and HMS were reported at $435/t and $420/t, respectively, on an LC-at-sight basis. Another buyer source disclosed a recent booking of 500 t of shredded scrap at $415/t CFR Qasim.

Current offers for shredded scrap from the UK are at $415-420/t CFR Qasim, down $4-6/t w-o-w.

Domestic market weak

In the domestic steel market, demand remains soft after the Eid holidays. However, the recent agreement with the International Monetary Fund (IMF) has resulted in tax impacts and subsequent increases in prices of Grade-60 steel rebars. Further hikes are expected in the coming days. Some brands have already raised their offers from PKR 3,000 to 5,000/t. Nonetheless, due to weak market conditions, most brands continue to sell at previous prices.

The Pakistani Rupee (PKR) was trading at 276 against the US dollar, appreciating by PKR 11 w-o-w, at the time of compiling this report.

In the domestic steel market, bids for deformed Grade-60 rebar (10-12 mm) have decreased by PKR 5,000/t ($18/t) w-o-w to PKR 245,000-250,000/t ($891-909/t) exw, inclusive of taxes. However, offers by major mills remain at PKR 263,000-265,000/t, which buyers find unworkable. Local scrap (shredded) offers have also declined w-o-w to PKR 175,000-178,000/t ($636-647/t)exy.

Furthermore, Pakistan continues to face prolonged power outages as power distribution companies implement loadshedding in major cities, exacerbating the discomfort caused by sweltering temperatures.

Outlook: The imported ferrous scrap market is slowly picking up after the Eid holidays, but uncertainty remains due to the wait for further instructions from banks and head offices. Buyers and traders are cautious even as the market is yet to stabilise. Prolonged power outages may pose a challenge for the industrial sector in the short term.