Pakistan: Imported ferrous scrap prices stable w-o-w; buyers cautious amid liquidity concerns

Pakistan's imported ferrous scrap market witnessed a sluggish trend, with an absence of trades due to firm offers from major sources like the UK and UAE amid rising freight rates.

According to a source, the steel market is experiencing an upward price trend due to increased taxes and other charges introduced in the budget. However, the overall situation remains challenging as liquidity issues persist. Additionally, many clarifications are still awaited, contributing to the ongoing uncertainty.

Shipping costs increased by $8-$10 for a 20ft container from the UAE to Port Qasim, attributed to container shortages potentially pushing shredded scrap offers to Pakistan to a minimum of $440-445/t CFR.

"No major bookings have been made, and market inquiries remain partial post-Eid. Given the current lacklustre domestic steel demand, steelmakers are hesitant about fresh imports. While import volumes were slightly better in May due to pre-Eid restocking, the anticipated boost in the steel market did not materialize," noted another source.

Around 2,000-3,000 t of shredded scrap from the UK and Europe were booked at $418-424/t CFR Qasim in the last seven days.

BigMint's assessment for Europe-origin shredded stood at $423/t, stable w-o-w.

Domestic market:

"Production has resumed but only at 50%, as the market remains sluggish. The pending release of the budget bill has created a lack of clarity causing hesitation among stakeholders. Finished steel sales are slow, with industry production levels hovering around 30-40%, and some producers have yet to restart operations. Current scrap prices are at PKR 148,000-150,000/t, while rebar is priced at PKR 250,000-252,000/t," commented a leading steel-maker.

Compounding the market's challenges, NEPRA imposed fixed charges last week, ranging from PKR 200-1,000 per month on domestic consumers and PKR 1,500-2,000 per month on industrial consumers starting 1 July, further dampening market sentiments.

According to another major steelmaker in Pakistan, the import market is currently very sluggish with minimal demand from steel users. Loaded shredded scrap is priced at $430/t CFR, with new scrap at $420-425/t. Good yards like Indicaa and Ward are offering at $425/t, while other suppliers are quoting between $420-$423/t. Domestically, scrap prices are 150,000-155,000/t ex-yard, rebar is priced at 252,000-255,000/t ex-works, and billet stands at 205,000-212,000/t ex-works. The slow demand in the steel sector is reflected in mixed prices.

Outlook: Imported ferrous scrap prices are expected to remain elevated due to ongoing fluctuations in freight rates, which are likely to influence market sentiment. However, steel demand is projected to remain weak, with prices for rebar and billet expected to remain rangebound.