Pakistan: Imported scrap offers inch up, market sentiments remain negative

Pakistan's imported scrap market remained firm on sluggish demand while imported scrap offers have inched up w-o-w. A few traders were offering at around $450-455/t levels; however, buyers were hesitant to book fresh material at those levels. However, prices have come down by around $40/t m-o-m.

Market sentiments remained negative on heavy rainfall and floods. On the other hand, the government stayed active in the flood relief campaign. However, some mills remained active in booking small quantities.

Fresh offers and deals

• Fresh offers for UK-origin shredded scrap are at $440-450/tonne (t) CFR, largely stable w-o-w.
  
  
• Around 1,600 t of UK shredded was booked at around $445-450/t CFR levels throughout the week.
  
  

Factors driving market

• Pakistani rupee continues to recover against USD: The Pakistani rupee (PKR) continued to recover against the US dollar for the second consecutive week. The PKR is now trading at 235.6 against the dollar.
  
  
• Low end-user demand: Due to floods and heavy rainfall in the market, unfavourable domestic market sentiments kept finished steel demand subdued. Some mills suspended their production and cut operational activities.
  
  
• Domestic market firm: Domestic finished steel demand remained sluggish owing to the natural calamities. In addition, increased production costs, LC restrictions, and higher power tariffs kept steelmakers cautious. However, offers for G-60 rebar (10-12mm) are at PKR 218,000-220,000/t exw-Punjab, including taxes, while the tradable value is lower by PKR 3,000-4,000/t ($13-17/t) exw, depending on payment terms.
  
  

Pakistan domestic prices

• Govt plans to expand power generation by 2031: The government has estimated an addition of 32,000 to 36,000 megawatts to power generation capacity by 2031, which will require an investment of about $55 billion to meet the country's electricity needs on the national grid, including Karachi. As such, the total installed capacity will increase from the existing 41,000 MW to above 65,000 MW, as per reports.
  
  

Outlook: The upcoming winter season is likely to remain supportive, considering the fact that it is a favourable season for construction activities. Many government-funded projects and construction activities may resume.