Pakistan: Imported ferrous scrap prices fall by $4/t w-o-w; market slows down amid political unrest
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- Political unrest keeps market activities bearish
- Scrap importers waiting for clarity
Imported ferrous scrap offers to Pakistan fell by $4/tonne (t) w-o-w, with BigMint's weekly assessment indicating that European shredded scrap stood at $386/t CFR Qasim. Around 2,500-3,000 t of UK/EU origin shredded scrap was booked at $384-389/t CFR Qasim in the last seven days.
Despite discounted rebar rebar prices sellers are facing challenges in sales.
The market is currently in a wait-and-watch mode, closely monitoring the declining global price trend. Other South Asian countries like India and Bangladesh have shown reduced interest in committing to deep-sea deals, leaving importers uncertain about their next moves.
Rebar prices in Pakistan witnessed a range-bound trend at PKR 249,000 -251,000/t ($897-904/t). The rebar versus scrap spread remained at over PKR 105,000-106,000/t, as local scrap was at PKR 144,000-146,000/t ($519-526/t).
A Karachi-based steel mill source said, "Market conditions remain weak, with rebar priced at PKR 245-250,000/t, billets at PKR 210,000/t, and bala at PKR 191,000-192,000/t. Scrap is trading at PKR 148,000-150,000/t, while imported UK/EU shredded stands at $385-388/t. Demand is subdued, and strikes led by the PTI political party have halted all market activities for the past 3-4 days, further disrupting the supply chain."
A mill representative stated, "The market is expected to close down in three weeks, with activity slowing down until the second week of January 2025. December is likely to see limited market activity, and we anticipate distress sales for rebar in the domestic market during this period."
As per market participants, protests across Pakistan have disrupted daily life as demonstrators demand the release of a prominent political leader. Key issues include calls for fresh elections and concerns over recent judicial amendments. The unrest has resulted in clashes with law enforcement agencies and widespread disruptions.
Punjab and Khyber Pakhtunkhwa (KPK) are among the most affected regions, with trade and transport at a standstill due to motorway closures over the past four days. Along with essential supplies like fuel, and vegetables, metal scrap has been delayed, significantly impacting businesses in northern Pakistan. Recovery efforts may take 2-3 days.
As per industry reports, Pakistan's steel industry is in a crisis, with many mills operating at just 20-30% capacity due to high electricity costs (PKR 52.39/unit). The Pakistan Association of Large Steel Producers (PALSP) has urged the government to reduce energy tariffs and implement a "wheeling" mechanism for cheaper power. The devaluation of the rupee and high interest rates have worsened the situation, causing a sharp decline in steel demand and unsold inventory. PALSP warns that without urgent reforms, the sector could collapse, leading to widespread job losses and further economic instability.
Outlook
The market outlook this week is expected to remain sluggish, with disruptions in the domestic steel and scrap markets due to ongoing political unrest. Coupled with continued liquidity challenges, the market is likely to stay slow in the coming days.
