Pakistan: Imported ferrous scrap prices drop by $7/t w-o-w as buying activity slows

• Choked by smog, Lahore imposes week-long lockdown
  
  
• Rebar producers offer discounts to increase cash flow
  
  

Imported ferrous scrap offers to Pakistan fell by $7/tonne (t) w-o-w, with BigMint's weekly assessment indicating that European shredded stood at $390/t CFR Qasim.

The imported market witnessed cautious buying due to weak rebar demand and ongoing smog issues. Rebar sellers are giving discounts and promoting cash sales due to ongoing liquidity challenges.

Imported scrap demand remains muted

A steel mill representative stated, "Market demand remains stable at lower levels amid a one-week lockdown in Lahore due to smog and pollution. There is sufficient inventory to last until January, and sellers are unlikely to make purchases this month. They plan to buy for February, with a target price of $380/t."

"Around 2-3 deals were heard booked from the UK and the UAE, and 2,000-2,500 t of imported fabrication and shredded, priced at $393-400/t, arrived in Pakistan in the last seven days," said a market participant.

A Karachi-based mill source indicated a wide bid-offer gap in the market: "Offers stood at $395-398/t, while bids were initially at $392/t and then dropped to $388-390/t. However, sellers held firm till the weekend."

He added, "If prices exceed $395/t, interest in even small bookings will diminish. However, for now, this price hike seems unlikely, as suppliers are closely monitoring steel demand."

Rebar sees slight drop in prices amid subdued demand

Amid weak demand, rebar prices in Pakistan witnessed a slight drop to PKR 248,000-250,000/t ($893-901/t). The rebar versus scrap spread remained at over PKR 100,000/t, as local scrap was at PKR 144,000-148,000/t ($519-533/t).

Meanwhile, billet offers edged down to PKR 212,000-213,000/t ($763-767/t) exw.

"Commercial billet prices continue to face pressure, while rebar tags have dropped slightly amid sluggish sales. Additionally, we are in the middle of the traditional off-season," observed a steel trader from the Sindh region.

A Punjab-based steel producer indicated, "The market has been sluggish for the past two to three weeks, with weak demand driving a notable decline in prices."

As per market participants, some rebar sellers are offering discounts on rebar sales due to cash flow issues. This led to a slight drop in prices, though, overall, they remain stable. The price reductions are primarily driven by individual liquidity needs, and there have been no significant changes in the market.

Customs' green channel changes cause delays

Recent changes in the Customs Department's green channel caused significant delays at ports, impacting thousands of containers and leading to financial losses for importers. Clearance rates have dropped from over 47% to below 26%, disrupting the supply of essential goods such as medicines and steel. The situation was worsened by overburdened assessment officers and the absence of a dedicated litigation department.

Pakistan FDI growth slows amid security concerns

Pakistan's foreign direct investment (FDI) rose 32% y-o-y to $904 million in July-October 2024, but October saw a 20% y-o-y decline to $132 million. China contributed 46% of the total. Ongoing violence in Balochistan and Khyber Pakhtunkhwa, along with worsening law and order, continues to deter foreign investors.

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