Pakistan: Imported scrap market remains quiet ahead of Eid holidays

Pakistan's imported scrap market has been quiet ahead of the Eid holidays. Prices are slightly down because of the limited inquiries from end-users. However, market participants are hopeful that trade may pick up after the Eid holidays.

"People are hoping for the best, but the market totally depends on how demand emerges after the Eid holidays," said a steel producer. Officially, the Eid holidays are over 20-25 April, but the market is likely to remains quiet for a week.

SteelMint's assessment for imported shredded scrap in containers stood at $460/t CFR, slightly down by $5/t w-o-w. Buying activity remains sluggish owing to volatile global scrap prices. However, buyers have held back from making fresh bookings, and transactions may improve after the holidays.

The production of steel dipped 9.19% during February, mainly because of a decline in production of billets/ingots by 24%, as per reports.

Production activity has come to a halt due to a shortage in raw materials, and many units are working on a small fraction of their capacity, mostly in the south-western region of the country.

The local industry was already struggling in the wake of the massive currency depreciation and high financial and input costs. He added that the unchecked inflow of smuggled steel has made survival a challenge for the industry.

Around 500,000 tonnes of steel bars were being smuggled into various parts of Pakistan from Iran and Afghanistan, thus dealing a crippling blow to the local manufacturers.

Further, as per local reports, around 100 plants paid PKR 99 billion in capacity payments in October-December, despite almost two-thirds of power plants operating below 20% but this news could not be confirmed till the time of reporting. The National Electric Power Regulatory Authority (Nepra) notified ex-Wapda Distribution Companies (discoms) to charge 47 paise per unit to their consumers to mop up PKR 15.5 billion in additional funds under the quarterly tariff adjustment (QTA) mechanism.

In a notice, Nepra said it had allowed the quarterly adjustments of PKR 15.454 billion for the second quarter (October-December) of 2022-23, to be recovered from consumers in three months, i.e., April, May, and June.

This has again increased the burden on end-consumers' pockets. Steel producers may again increase their finished steel prices.

Further, finished steel sales remained low for yet another week, due to low consumption during Ramadan. The forthcoming Eid holidays kept trade activities muted. Increased production costs, electricity charges, and the continued instability of the national currency have also kept steelmakers under pressure.

Fresh, workable offers for deformed grade 60 rebars (10-12 mm) were heard at PKR 265,000-270,000/t exw ($933-951/t), including taxes. Prices have come down due to low demand. However, official offers from steel mills remain high.

Nevertheless, domestic scrap prices have moved up due to material scarcity. The current offers for local scrap hover around PKR180,000-185,000/t ($634-651/t) exy (equivalent to shredded) levels.

"Local scrap prices may go up further if demand picks up," said a scrap buyer.

PKR gains marginally against dollar: The Pakistani rupee experienced a marginal gain against the US dollar in the currency exchange market, closing at 283.2.

Pakistan domestic prices