Pakistan: Imported Scrap Offers Stable, Local Steel Market Eyes Improvement
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SteelMint learned in recent conversation with market participants that Pakistan steel market is facing a lot of uncertainties at the moment. After witnessing massive currency depreciation by 6-7% last week, PKR has recovered back almost a half against USD and interbank rate remains at 137-138 levels today. On the other hand, Pakistan steel melters association appeals the Government officials to deliver positive response in order to bring the steel industry out of current crisis situation.
Imported scrap offers stand almost stable however, market expects an improvement in local steel prices based on stability in the currency in upcoming days. Limited inquiries for imported scrap heard amid low scrap inventories.
Offers for Containerized Shredded 211 from Europe and UK heard in the range USD 335-340/MT, CFR Qasim, almost stable W-o-W. However, after G-20 summit, some of the suppliers have turned positive targeting USD 345-350/MT levels for Shredded now. Although no buying interest seen at these levels at the moment.
Few buyers turn active for short term buying for Dubai scrap. HMS 1 is being offered in the range USD 335-340/MT with buying interest still at USD 330-335/MT, CFR on less supportive local fundamental.
Local market endures huge revenue loss - More than 50 steel melting furnaces located in Lahore area being unable to make profits have already been closed with effect from 1st Dec'18. And more than 100 furnaces and rerolling mills of Gujranwala and Balochistan have been closed en bloc. According to participants, if this continues the industry will lose huge revenue.
Local situation may improve once global Shredded scrap prices will reach at above USD 350/MT, CFR levels again however, that seems to happen now only with the start of new year, shared a source.
In addition, the concerns of smuggling of cheaper billets, poor stock exchange position and the sustainability of sales tax at PKR 13 per electricity consumed remain to be fixed yet.
Local steel prices likely to improve in coming days - In Punjab region, deformed rebar assessed in the range PKR 99,000-100,000/MT, ex-works varying on quality and thickness. In Sindh region price assessed at PKR 101,000-102,000/MT, ex-works. Deformed premium G-60 rebar prices heard in the range PKR 104,000-106,000/MT, ex-Karachi inclusive of taxes.
Local steel price assessment as on 04th Dec'18 -
| Average Prices, Ex-work Punjab and Lahore, inclusive of taxes | ||||
| Particular | 03-Dec'18 | Last assessment on 27-Nov'18 | W-o-W Change | |
| PKR/MT | USD/MT | PKR/MT | PKR | |
| Local Scrap (Equivalent to Shredded) | 57,500 | 414 | 57,500 | 0 |
| Bala (Local Billet) | 75,500-76,000 | 543-547 | 75,000 | 500 |
| CC Billet (Grade 40) | 81,500-82,000 | 586-590 | 81,000 | 500 |
| CC Billet (Grade 60) | 83,000-83,500 | 596-600 | 82,500 | 500 |
| Deformed bar (G-60) | 99,000-100,000 | 712-719 | 98,000-99,000 | 1000 |
Source: SteelMint Research, USD/PKR = 139
Ship breaking market remains uncompetitive - According to reports, Gadani based buyers remained away from displaying interest on local issues. Market expects very less activities till this calendar year end as rates remain uncompetitive and there is still need of raising of recycling standards on tankers. Local ship plate prices declined to PKR 75,000/MT levels down PKR 1000/MT as against the last report. While Ship breaking prices reported at USD 405/LT for dry bulk cargo, at USD 425/LT for containers and USD 415/LT for tankers.
