Pakistan: Imported Scrap Market Stable; Local Steel Prices Fall

SteelMint learned in recent conversations with industry participants that after several weeks of sharp downfall in prices, imported scrap offers to Pakistan witnessed some stability this week, while buying activity picked up slightly as compared to last week on some certainty in the market. Domestic steel prices moved down due to slow sales amid limited demand even as quite a few mills have cut their production to secure their margins.

SteelMint's assessment for containerized Shredded 211 scrap from UK/Europe stands at USD 260-265/MT, CFR Qasim, more or less stable as compared to last week. Few deals for shredded scrap at USD 260/MT were reported during the latter half of last week, however, this week prices have been range-bound, with quite a few trades being concluded at USD 263-265/MT CFR also.

Inquiries in the market increased as many steelmakers who were cautiously watching the downtrend since few weeks are looking to restock inventories at lower prices. Some pressure from the global suppliers was observed, resisting against any further drop for the time being, while few participants believed that prices may move up slightly in the coming weeks.

HMS offers inched down slightly amid continued slow activity, with Dubai origin HMS 1 (super) currently being offered at around USD 260/MT CFR Qasim, with few deals reported. HMS 1&2 of European origin was assessed at around USD 250/MT CFR. As per industry sources, no decision has yet been arrived at for higher import duty on imported HMS scrap, keeping buyers' interest limited.

Pakistani Rupee stood at around 156 levels against USD this week, remaining almost stable in this range since the last 3 weeks.

Domestic steel prices fall on slow sales - Demand for finished steel in the domestic market remains subdued on the continued slowdown in construction activities and stalling of several infrastructure projects by the government on the unavailability of funds, in addition to which, the monsoon slowdown is likely to continue for a couple of more weeks. With surplus steel available in the market amid slow demand, the sales have taken a hit, with several steelmakers operating at lowered production levels, to cut their losses.

As a result, steel prices have come down by PKR 1,500-2000/MT (USD 10-13) over the last week, while since the beginning of this month, the prices have fallen by around PKR 4000/MT (USD 26).

In Northern region, rebar average selling prices were assessed at around PKR 111,000-112,000/MT, ex-works (USD 713-719) meanwhile Southern (Karachi region) steel mills are offering rebar at around PKR 113-114,000/MT ex works (USD 726-732). Even further drop was observed Billet prices, with Bala Billet and CC Billet (grade 40) standing at PKR 83,000/MT (USD 533) and PKR 89,000/MT (USD 572) respectively, falling by PKR 4000-5000/MT in a week.

Local scrap eq to shredded also dropped by PKR 2000/MT, currently assessed at around PKR 62,000/MT.