Pakistan: Imported ferrous scrap market sees firm supplier stance; offers rise by $4/t w-o-w

Imported ferrous scrap prices in Pakistan saw a $4/t increase compared to the previous week. This uptick in offers was driven by global scrap sentiments, fuelled by an anticipated rise in freight rates and ongoing geopolitical conflicts in the Middle East. Additionally, bullish offers from suppliers for South Asian buyers amid higher collection rates in the regions.

Limited offers from the Middle East, indicative from HMS (80:20), were offered at $400/t, while Sheared HMS and PNS mix at $410-415/t CFR Qasim.

BigMint's assessment for Europe-origin shredded stood at $430/t, up by 4/t w-o-w.

According to market insiders, there has been a slowdown in activity. Over the past 15 days, mills have remained closed, with no scrap purchases and sluggish rebar sales. This week, we will adopt a wait-and-watch approach to monitor the trend and plan to make purchases next week. Suppliers indicated that India's aggressive buying may lead to price increases for Pakistan as well.

Domestic market:

In the domestic scrap and steel market, the indicative price remained range-bound as rebar prices were reported at around PKR 253,000-255,000/t ($910-917/t), with scrap at PKR 152,000-156,000/t($547-561/t) and billet at PKR 215,000-218,000/t($773-784/t).

According to a representative from a mill, "The market didn't pick up as anticipated due to Eid holidays last week. Consequently, there has been sluggish demand for rebar, leading sellers to lower prices and offer sales. Rebar sales are currently ranging from PKR 245,000-250,000/t. Additionally, there's a shortage of labour, with workers not returning after the Eid holidays. However, we anticipate having a clearer picture of the market situation by the next week."

As per major mill sources, demand in the rebar and billet markets continued to remain dull post-Eid this week.

Pakistan successfully repaid a $1 billion foreign debt days before the maturity date of a 10-year Eurobond, boosting global investor confidence. The State Bank of Pakistan executed the repayment on 12 April 2024, ahead of the scheduled 15 April maturity date. This has reduced Pakistan's outstanding foreign debt from international bonds to $6.8 billion. The repaid bond surged to $1 per unit last week, signalling strong investor confidence.

New IMF agreement: Pakistan is engaging with the International Monetary Fund (IMF) for a new multi-billion dollar loan agreement, likely for at least three years, to support its economic reform programme. Finance Minister Muhammad Aurangzeb is attending IMF and World Bank spring meetings in Washington to discuss climate change and assist indebted nations. Negotiations for a new IMF loan programme are underway, with Pakistan seeking billions of dollars. The country aims to balance its relationships with the US and China amidst their trade war. Pakistan's reform agenda includes privatising state-owned enterprises, starting with Pakistan International Airlines, with plans for further privatisations in the pipeline.

Outlook: As per market observers, Pakistan is likely to remain in a wait-and-watch mode, especially to get a clearer outlook, with minimal trades from major mills.