Pakistan: Imported scrap prices fall $4/t amid prevailing caution in market, slow trade activities
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- Political instability and protests weigh on steel market
- Some mills report increased buying activity ahead of winter holidays
Imported ferrous scrap offers to Pakistan fell by $4/tonne (t) w-o-w, with BigMint's weekly assessment indicating that European shredded scrap stood at $382/t CFR Qasim.
Some deals were concluded at $371-385/t, and some bids started to arrive at as low a level as $376-378/t, although strong resistance was seen from sellers.
Market scenario
Rebar prices in Pakistan witnessed a range-bound trend at PKR 245,000-248,000/t ($897-904/t). The rebar versus scrap spread remained at over PKR 106,000-108,000/t ($381-388/t), as local scrap was at PKR 142,000-144,000/t ($511-518/t). Billet levels stood at PKR 207,000-208,000/t ($744-748/t).
As per industry insiders, pressure continued in the commercial Bala market last week, while rebar prices remained range-bound amid persistently slow sales in the off-season.
Although protests have ended, the market remains cautious, with new PTI-led protest calls likely to further weigh down sentiment.
The Federal Board of Revenue (FBR) in Pakistan is tightening regulations to address tax evasion in the steel sector, particularly targeting manufacturers in the FATA/PATA regions. These areas were historically exempt from certain taxes under the Federal Excise Duty (FED) framework to support economic recovery but are now under scrutiny for alleged misuse of these exemptions, creating unfair advantages over compliant manufacturers in other regions.
FATA (Federally Administered Tribal Areas) and PATA (Provincially Administered Tribal Areas) had unique governance structures, with FATA merging into Khyber Pakhtunkhwa (KP) in 2018, while PATA regions, like Malakand, retained special provisions.
Steel producers, such as Century Steel Mills, are voicing concerns about market distortions and demanding stricter enforcement of equitable tax policies to restore competitiveness. Reports suggest some steel units in these regions may shut down in protest against policy ambiguities and the uncertain regulatory environment.
Outlook: A slight uptick in market activity is expected this week, as normalcy has returned following the recent riots and strikes. However, concerns persist over the impact of new strike calls, which could potentially disrupt law and order and challenge the sector's recovery momentum. The steel market will remain cautious as political instability may continue to weigh on sentiment, affecting buying decisions and overall market confidence.
