Pakistan: Imported scrap prices fall further as rebar sees downward correction

Pakistan's imported scrap market remained less active throughout the week while prices of the same continued to downtrend for the last six weeks on limited deals and dull domestic market sentiments.

Fresh offers

• UK/EU-origin shredded in containers was being offered at $535-540/t CFR Qasim levels, down by a further $5-10/t w-o-w. US-origin shredded is being cited at $530/t CFR Qasim levels, down by $10/t w-o-w.
  
  
• UAE-origin HMS 1 arrival cargo is available at $470-480/t CFR Qasim basis.

  'Around 4,000 t of imported shredded scrap in containers from the UK was booked by Pakistan-based steel mills at $537-540/t CFR in the last 3-4 days. Volumes have been low since the past two weeks," said a prominent scrap trader.

  Local scrap prices cool off: Local scrap (equivalent- shredded scrap) prices have also corrected to PKR 116,000-120,000/t, exy-Punjab, lower by PKR 1,000/t w-o-w, as per SteelMint's assessment. Market participants are expecting further decline in the coming days. Additionally, due to gas shortage-induced outages, the majority of the mini-mills in the Punjab/Gujranwala area have closed down, as per the latest government notification.

  Mills seen offering discounts on rebar to push sales: Domestic offers for G-60 (10-12mm) grade rebar are at PKR 191,000- 193,000/t exw, including taxes. The year-end sees liquidity turning tight, along with slow construction activities. Thus, mills have started offering discounts of around PKR 3,000-5,000/t in order to push sales.
  
  

Pakistan domestic prices

Reasons behind dull market sentiments

• Mills adopt 'wait & watch' approach: With imported scrap prices on a downtrend, steel mills are staying away from active bookings. Expecting further price corrections, they are opting to wait and watch. Demand from northern Pakistan (Punjab/Lahore) witnessed a significant fall, owing to heavy smog in the winter season.
  
  
• Price pressure from high seas cargo: Offers for high seas cargo are heard being priced lower than regular ones. Few offers for UK-origin shredded scrap in containers was heard at around $530/t CFR Port Qasim which have material deliveries scheduled in Jan'22.
  
  
• Liquidity issue during month-end: Last ten days of every month are due for all pending electricity bills. Hence, major steel mills are in trouble due to liquidity issues in the market.
  
  
• PKR volatility against the dollar: The Pakistani rupee (PKR) continued to hit a record all-time low of 179.44 against the dollar towards last weekend. Currently, the Pakistani rupee is trading at 177.9 levels against 178.17 recorded last week against the dollar.
  
  

Outlook

Considering the continued price drop, mills were away from the market. But, to restock scrap inventory, mills are likely to resume bookings soon.