Pakistan: Imported ferrous scrap market witnesses price correction w-o-w as buyers remain cautious

Pakistan's imported scrap prices fluctuated in the range of $430-435/tonne (t) CFR w-o-w. Some buyers were looking for deals below $430/t. Buyers adopted a cautious wait-and-watch approach, anticipating further price correction. Among sellers there was concern about current pricing levels. Last week, transactions were seen in the range of $430-438/t for shipments of 4,500-5,000 tonnes (t) of shredded scrap from Europe, with a few deals remaining unconfirmed.

Currently, the scrap market is on a downward trajectory, and this corrective phase is expected to persist for the next two weeks. This trend may also have a noticeable impact on steel prices.

Domestic market: Local scrap offers were assessed at around PKR 170,000-175,000/t ($609-623/t). Billet offers were at PKR 248,000-250,000/t ($820-830/t), while rebar offers stood at PKR 280,000-285,000/t($954-964/t).

As per market participants, Pakistan's domestic market is weak at the moment. The dollar is depreciating and projections are that 1 USD will touch PKR 280.

Discussing the general trend, a steel mill source in Pakistan informed: "In the last 10 days of the month, steel mills have to pay heavy electricity bills, so they actively sell the material which results in rebar prices generally going down."

Currency exchange rates: The strengthening of the Pakistani rupee, nearing a rate of 290 against the dollar, has instilled caution in the market, as participants are waiting for clear trends to emerge in currency exchange. According to forex dealers, the greenback was being traded at PKR 297 in the open market, whereas the banks were trading with importers at PKR 296.45.

The dollar was changing hands for PKR 294.77 in the interbank market, gaining PKR 2.6-3, according to the Exchange Companies Association of Pakistan.

Outlook: The imported ferrous scrap market is likely to see a slowdown due to insufficient steel sales followed by a hike in oil prices. Market sentiments are expected to remain mixed as participants are seeking more price correction following the appreciation of the PKR this week.