Pakistan: Imported ferrous scrap prices rise $4/t w-o-w; buyers show interest for prompt shipments

In Pakistan, imported ferrous scrap offers increased slightly and the market witnessed some bookings last week.

As per some industry insiders, active restocking was heard in good volumes by a few mills mainly for the prompt shipment of cargo, with more inquiries expected to be heard this week.

A major steelmaker commented, "We're facing an underperforming market, with most infrastructure projects awaiting approval from the newly allocated budget for infra development. Long steel manufacturers are eagerly anticipating market improvement, as they have sufficient inventory that needs to be sold."

Seller side sentiment: Before the summer break, a few UK suppliers were offering materials at the $425-428/t price range and were in a hurry to close yards and exit the market for at least a month. Despite slow collection rates, suppliers are ready to ship materials to Pakistan as markets like Bangladesh shows little interest in UK materials.

A shortage of containers drove up freight costs and this escalation will increase the overall cost of materials. Additionally, the Red Sea route has become increasingly unsafe, prompting many shipping lines to divert vessels via the longer Cape Town route to reach South Asia.

This detour not only lengthens shipment times but also requires additional ships to maintain a steady supply chain, leading to higher operational costs.

Shredded offers ranged from $425-430/t based on the origin, with deals closing at $420-422/t from specific yards, whereas fresh offers from the UAE remained stable last week.

Around 5,500-6,000 t of shredded scrap from the UK and Europe were booked at $420-425/t CFR Qasim in the last seven days.

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

Domestic market

In the domestic market, average rebar offers were around PKR 258,000-260,000/t, a decrease of up to PKR 3,000-4,000/t. Demand for finished products remained relatively slow with a moderate expectation for rising demand. Billet prices also decreased by PKR 2,500-3,000/t w-o-w and domestic scrap prices dropped by over PKR 3,500-4,000/t exy basis.

However, rebar producers are trying to push prices up amid liquidity challenges. The monsoon season might slow business, but inventory gaps are helping sellers maintain their slow sales pace.

Karachi's stock market achieved a record-high closing despite a temporary halt due to a fire at the PSX building. Investors are optimistic about strong earnings, anticipating the IMF Staff-Level Agreement and government tax reforms in the FY25 budget. Positive sentiments also stem from expectations of corporate payouts, easing monetary policies by SBP, and World Bank support for privatising state-owned enterprises. Key sectors like cement and banking, including companies like Maple Leaf, Fauji Cement, Lucky Cement, and banks like National Bank and Habib Bank, boosted the index by 353.41 points to settle at 80,566.21. Trading volume decreased by 41.72%, with foreign investors turning net sellers.

Outlook: Imported ferrous scrap prices in Pakistan are expected to stay high, driven by increased collection costs on the suppliers' end. This factor is expected to sway market decisions ahead of procurement. However, the demand for long steel is projected to remain subdued amid the monsoon season and sluggish construction activities. Globally, route diversions and delays in shipments propelled the need for more vessels for trades, and a cool-down in freight rates seems unlikely in the foreseeable future.