Pakistan: Imported ferrous scrap index drop by $4/t w-o-w; domestic market slows amid monsoon

Pakistan's imported scrap index dropped by $4/t w-o-w despite higher offers from the UK at $430-432/t and the UAE at $434-435/t. Buyers remained less interested at these elevated levels. Local scrap shortages pushed up prices last week but the current monsoon season is keeping demand slow which is affecting domestic scrap prices.

On the other hand, domestic rebar and billet prices remained down as major sales were absent and end-users were not fully active. Buyers are more interested in the $422-425/t range for UK origin shredded scrap, but hesitant to restock due to monsoon interruptions and weak demand from the construction sector.

BigMint's assessment of Europe-origin shredded stood at $426/t, down by $4/t w-o-w.

The market reopened on Thursday post-Muharram, and mills raised prices due to increased production costs and declining raw material inventories. However, the increased prices failed to attract buyers.

As per a major steel mill, buyers are cautious about procurement. The recent IMF approval may help the market recover from LC-related issues. The domestic market remained stable despite the high monsoon season. Prompt shipment materials are available at $430/t from the UK.

Changes in domestic scrap and semi-finished prices are nominal as steel mills face weak sales, with market prices PKR 4,000-5,000/t lower than the official tags due to bearish sentiments emerging from end-users. Mills are trying to reduce inventory.

A major trade source informed, in Pakistan, buying activity is limited as the market had already slowed during Muharram, and rebar sales are happening at break-even levels with very slim margins, making it less attractive for sellers at the moment.

Around 4,000-4,500 t of shredded scrap from the UK and Europe were booked at $425-428/t CFR Qasim in the last seven days.

Domestic market: Billet prices have been decreasing since last week, and now stand at PKR 214,500-215,500/t ex-works. Domestic scrap is priced at PKR 155,000/t, rebar at PKR 255,000-258,000/t exw.

In the Sindh region, rebar prices are generally higher due to a stronger presence of steel mills, while Punjab faces intense competition and excessive steel supply which pressures down prices. Scrap generation is similar in both regions.

As per a major steelmaker, Gadani's ship-breaking industry produces large quantities of ship plates, primarily used by Sindh-based mills to produce small, non-standard bars. But, looking at the current situation, the generation remains slow which has affected this segment which enjoys a 6-7% market share.

Outlook

Freight rates from the UK to Qasim, including inland haulage will be touching $1,600-$1,700/TEU ($56-60/t) levels in August. Traders expect that CFR prices for the UK-to-Pakistan routes will continue to rise further due to container shortages.