Pakistan: Imported ferrous scrap prices dip $3/t w-o-w in bearish steel market
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Imported ferrous scrap prices in Pakistan saw a $3/tonne (t) drop over last week, as steelmakers remained bearish about procuring raw materials at higher prices amid weaker sales in the rebar and billets markets. Local scrap prices also remained downward with sluggish demand from manufacturers amid production cuts.
Current market activity for shredded scrap remains slow, with indicative prices hovering at $416-420/t. Some buyers are seeking material to meet their regular requirements, even as production levels remain below 40%. Meanwhile, other buyers are adopting a wait-and-see approach. HMS from the UAE is being offered at $410-412/t. But this has constrained buyers' flexibility in negotiations due to the narrow price range.
A steel mill official stated, "Buying activity is currently non-existent, and market sentiments are extremely poor. Looking ahead, we have the Eid holidays approaching, which means no work will be happening for the next one to one-and-a-half months. Production levels are already down to 30%, and we plan to take a two-week shutdown during Eid. Additionally, there is a significant price gap of almost $20/t between domestic and imported scrap."
BigMint's assessment for Europe-origin shredded stood at $419/t, down by 3/t w-o-w.
Around 2,500-3,000 t of shredded scrap from the UK and Europe were booked at $418-422/t CFR Qasim in the last seven days.
Market insiders inform that the steel market in Pakistan has been quite sluggish. Both finished and semi-finished steel products are experiencing slow and disrupted sales, leading to a stagnant market overall.
Domestic market: In the domestic market, average rebar offers were heard at around PKR 242,000-248,000/t. Demand for finished products continued to downtrend, with mills remaining skeptical about domestic raw material procurement and squeezed production levels. Domestic scrap indicative offers were heard at PKR 145,000-150,000/t exw-levels whereas CC billets were priced between PKR 210,000-214,000/t.
As per industry sources, "Money flow remains slow in the market. Players are waiting for the upcoming budget which is expected to be presented on 7 June. There is speculation that the government might need to impose additional taxes of around PKR 1.3 trillion to meet revenue targets and secure continued support from international lenders. This could push the Federal Board of Revenue's (FBR's) annual target to PKR 12.3 trillion. The budget might also need to address challenges like inflation and economic growth."
Outlook: According to market sources, the upcoming week and early next week are expected to remain subdued due to expected liquidity issues. The local market is poised for a downturn, particularly affecting scrap and semi-finished products, with minimal activity expected in the near term.
