Pakistan: Imported scrap market bearish, however offers rebound on active Indian buying

Pakistan's imported scrap market remained mostly quiet as buyers held fresh bookings. Market participants have opted for a wait and watch mode to get some clarity on price direction and liquidity problems occurring due to the volatility in currency exchange rates, SteelMint understands.

"Market participants were less active and were not responding to the suppliers' offers, owing to higher production costs and lower margins caused by currency devaluation," said a major scrap trader.

The volatile national currency continued to hit fresh lows against the dollar. The Pakistani rupee devalued further at the start of the new month and is trading at 239.3 against the dollar.

Furthermore, heavy rains in many parts of Pakistan have kept rebar demand slow. Despite this, major mills increased rebar prices a week ago on the back of continuous and unprecedented devaluation of PKR, increase in energy costs, and rising input costs. However, the workable price levels were at around PKR 230,000-233,000/t.

Active Indian buying lifts imported scrap prices

SteelMint's assessment for UK/EU-origin shredded stands at $460-465/t CFR Qasim. Imported scrap offers were slightly up by $5/t w-o-w, however, bids were comparatively low.

Imported prices to Pakistan rebounded as India remained active in the imported market due to domestic scrap shortage, GST billing issues and strong demand. Indian buyers are finding imported scrap more feasible and cost competitive as compared to domestic material.

Two bulk cargoes have been booked by India recently from the UK and USA, sources confirmed. A total of 48,000 t of mixed bulk cargo, including shredded and HMS, was booked from the UK at an average price of $405/t CFR, Chennai. In another deal, a cargo containing around 22,000 t of USA-origin shredded and PNS, and 11,000 t of HMS was traded at an average price of $409/t, CFR Chennai.

Thus, the presence of Indian buyers have lifted imported offers to Pakistan as well.

Outlook

The upcoming Muharram Ashura holidays in Pakistan are likely to keep the market muted till 10th of Aug'22. On the other hand, the presence of Indian buyers in the imported market may keep offers on the higher side.