Pakistan: Imported scrap index remains range-bound w-o-w; steelmakers slash CRC prices to drive sales
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Pakistan's imported ferrous scrap index has remained largely stable with a slight uptick by $1/tonne (t) w-o-w due to continued weak demand in finished steel and dull response from end-users.
BigMint's assessment of Europe-origin shredded scrap was at $399/t, up by $1/t w-o-w.
According to a major steelmaker, sluggish stock movement may lead to a rebar price cut of PKR 5,000 to 7,000/t by mid-week. Another trader said, "Rebar prices were under pressure, with producers selling below official rates due to weak liquidity."
"HMS prices from the UAE were at $385/t. Fabrication scrap prices stood at $415/t. UK offers were around $400/t, but there was minimal response. Mills were hesitant to book, and there was a strong possibility that rebar and billet prices would be reduced due to market inactivity," another source told BigMint.
In the past seven days, approximately 8,000-9,000 t of shredded scrap from the UK were booked at $393-402/t CFR Qasim.
Domestic market: Billet and rebar prices continued to fluctuate and stood at PKR 210,000-212,000/t and PKR 244,000-248,000/t exw, respectively. Domestic scrap was priced at PKR 145,000-148,000/t exy, down by PKR 1,000-1,500/t. The spread between rebar and domestic scrap prices in Pakistan has exceeded PKR 100,000/t.
An official representing a Pakistani mill informed that mills are planning to lower their rebar prices, which currently stand at PKR 244,000-250,000/t, with billets priced at PKR 215,000/t. Local scrap was available at PKR 145,000-150,000/t, with moderate market availability.
Industry reports indicate that domestic scrap availability remained limited, but prices were lower than imports in the local market. Last week, CRC producers reduced prices by PKR 45,000/t to generate and drive sales in a sluggish market. Commercial billets also experienced price fluctuations and slow sales, primarily due to liquidity constraints.
The IMF has released its executive board meeting schedule through 4 September 2024, and Pakistan's case is not on the agenda. Despite this, the Pakistani government remained optimistic about securing a $7 billion bailout package from the IMF next month. Federal Minister for Finance Senator Muhammad Aurangzeb expressed confidence that the IMF will approve the loan programme, following an agreement reached in July. Pakistan is also working to roll over $12 billion in loans from China, Saudi Arabia, and the UAE and has requested an additional $1.2 billion from Saudi Arabia. The absence of Pakistan from the IMF's schedule raised concerns, but the government is hopeful for approval in September.
Outlook: The outlook for the imported scrap market remains uncertain. Steelmakers are under pressure from weak end-user demand and are expected to reduce their finished prices by up to PKR 7,000/t. Meanwhile, imported scrap prices are likely to remain range-bound between $400-405/t. Domestic scrap buying activity might see an uptick as buyers seek to average out their costs.