Pakistan: Imported ferrous scrap market slows down amid weak domestic demand, increased electric charges

Pakistan's imported ferrous scrap market is experiencing slow movement, with some containerised bookings were concluded at lower prices from UK-origin. Sellers are reluctant to reduce offers further, but negotiations are ongoing for deals. Shredded materials were traded at approximately $404-408/t this week.

"Imported materials are a cheaper option for buyers as domestic scrap hovers at PKR 172,000 -173,000/t($602-606/t)," an imported mentioned.

"The Pakistani imported scrap market is showing signs of softening, with recent offers around $408/t. While some suppliers are asking for $415/t buyers are not showing much interest, and some traders are even offering lower prices at $404/t," another scrap buyer informed.

SteelMint's assessment for shredded scrap from the UK is at $408-410/t CFR Qasim, largely stable w-o-w.

Domestic market overview

• Rebar prices fluctuate: In the domestic market, deformed grade-60 rebar (10-12 mm) fluctuated by PKR 5,000-7,000/t ($17-24/t) w-o-w to PKR 245,000-248,000/t ($857-868/t) exw, inclusive of taxes. Local scrap ( eq. to shredded) offers also declined to PKR 171,000-172,000/t ($598-601/t) exy. The domestic steel and scrap market is expected to remain sluggish due to potential increases in electricity and gas charges and move at a slow pace up to the 10th of August (Muharram) according to market sources.
  
  

At the time of compiling the report, the PKR weakened to 285 against the US dollar, down by PKR 6 w-o-w.

"Rebar offers are at PKR245,000/t, local scrap at PKR 170,000/t and billet at PKR 218,000/t. There's an expected increase of rebar prices due to the increase in power tariffs. The tariff implementation is likely from the first week of July," a source from a major mill informed.

• Govt approves power tariff hike: The government has raised the electricity tariff because of the tough International Monetary Fund (IMF) conditions but added that 63% of the domestic consumers are using up to 200 units per month would be exempted from the power tariff increase. A partial subsidy was also being given to consumers of up to 300 units per month which comprises around 31% of the total domestic consumers. The federal cabinet approved the power regulator's request to increase the national average tariff, which will see some residential consumers paying up to INR 7.50 more per unit.
  
  
• PKR suffers loss against USD: It is generally felt among the traders and industrialists that the poor economic growth like the 2.5% estimated by the IMF for FY24, would not help the exchange rate or the rupee to get stability. They said a strong base is required to support the rupee against the dollar.
  
  

Outlook

The short-term outlook for Pakistan's ferrous scrap market indicates a softening trend in the imported scrap segment, while domestic steel and scrap prices are experiencing fluctuations. Uncertainties regarding electricity tariff hikes and economic conditions may influence market dynamics in the coming days.