Pakistan: Imported ferrous scrap prices stable w-o-w; rebar offers surge over $25/t amid raw material shortages

Imported ferrous scrap prices in Pakistan remained stable w-o-w. Steelmakers raised rebar offers amid domestic raw material shortages, anticipating increased inquiries and buying activity ahead of Eid.

On 28 May 2024, Pakistan observed a national holiday for Youm-i-Takbeer, halting firm offers and bids in the market and activity remained subdued.

According to steel mill sources, throughout the second half of the month, distress sales have diminished, which is expected to support the market. Additionally, rebar sales and cash flows have begun to show slight improvement.

End users noted that while rebar prices have increased, this trend is unlikely to continue due to high electricity bills and the upcoming Eid holidays. The market activity for shredded scrap remained sluggish, with indicative prices around $418-420/t. Offers for HMS and PNS mix from the UAE are at $410-412/t, while buyers are aiming for workable levels between $405-408/t.

According to a major steel mill source, shredded offers are at $420-424/t, with no lower prices available compared to India's $415-418/t. Suppliers are more focused on India and Bangladesh, where payment issues are less critical. Meanwhile, poor performance in the domestic rebar market has kept manufacturers quiet.

BigMint's assessment for Europe-origin shredded stood at $418/t, unchanged w-o-w.

Around 2,500-3,000 t of shredded scrap from the UK and Europe were booked at $415-424/t CFR Qasim in the last seven days.

Domestic market: In the domestic market, average rebar offers were around PKR 253,000-255,000/t and were increased up to PKR 8,000/t. Demand for finished products remained sluggish, with limited expectations of a rebound. Additionally, market dynamics saw a notable price increase initiated by Mughal Steel, followed by other market players.

However, rebar sales and cash flows have started to show slight improvement ahead of Eid and the upcoming budget. Domestic scrap indicative offers were heard at PKR 154,000-157,000/t exw-levels whereas CC billets were priced between PKR 216,000-220,000/t.

As per industry reports, International Industries Limited (IIL), Pakistan's major pipe producer, reported a 6.3% decrease in net profit to PKR 1.33 billion (USD 4.76 million) for the nine-month period ending 31 March, 2024. Despite this, sales revenue grew by 12% y-o-y to PKR 22.6 billion (USD 81 million). Domestic sales volume fell by 5%, while exports increased by 2%. Challenges were attributed to subdued economic growth, impacting sectors like construction and automotive. However, IIL remained cautiously optimistic about future prospects, citing potential political stability and government initiatives to attract foreign investment.

Outlook: Steel and scrap prices are expected to remain stable or slightly increase due to upcoming market demand. However, impending changes in the federal budget, scheduled for 6 June 2024, may introduce new taxes and might affect steel prices. There's a possibility of increased customs duties on imports, which could further impact scrap prices.