Pakistan: Imported scrap prices fall further on low demand from mills

Pakistan imported scrap prices have maintained their downturn for the last five weeks. Limited bookings are happening despite imported scrap prices being at lower levels. Most of the major mills were out of the market for almost the last two weeks.

Fresh offers

• UK/EU-origin shredded in containers is being offered at $545-550/t CFR Qasim levels, dropping by $5-10/t w-o-w. While US-origin shredded is being cited at $540/t CFR Qasim levels. Few deals of 500-1,000t were concluded from USA earlier, owing to the high price of UK/EU shredded.
  
  
• UAE-origin HMS 1 arrival cargo is available at $470-480/t CFR Qasim basis.
  
  

Market highlights

• Finished steel market slows down: Pakistan's domestic market has slowed down due to the year-end when liquidity becomes very tight and impacts market activities, including construction. Domestic rebar offers for G-60 (10-12mm) grade are at PKR 191,000- 193,000/t exw, including taxes. However, the demand from end-users remained slow due to bad weather and most mega projects have slowed down or are on hold due to lack of government funds.
  
  
• Graded and non-graded rebar price gap widens: The graded (G-60) and non-graded (commercial) rebar price gap has widened recently. The non-graded rebar offer is at PKR 162,000-163,000/t exw and its rate difference with Grade-60 is PKR 30,000/t exw. Contractors and builders have shifted towards commercial rebars in replacement of G-60.
  
  
• Pakistan mills face liquidity issue: Major steel mills are in trouble due to cash liquidity issue in the market seen in the last few weeks which has slowed down construction activities.
  
  
• PKR depreciates further against dollar: The Pakistani rupee (PKR) continued to beat its record as it has now set a seven-month all-time low of 177.89 against the dollar. Currently, the Pakistani rupee is trading at 178.17 levels against 176.6 which was recorded last week against the dollar.
  
  
• Local scrap prices follow global trend: In particular, volatility in exchange rates has continued to bring pressure on Pakistani steelmakers. Additionally, due to gas shortage induced outages, majority of the mini-mills in Punjab/Gujranwala area have closed down, as per the latest government notification. Local scrap (equivalent- shredded scrap) prices also fell significantly by PKR 5,000-10,000/t to PKR 116,000-120,000/t, exy-Punjab w-o-w, as per SteelMint's assessment. Market participants are expecting further decline in the coming days.
  
  

Pakistan domestic prices

Outlook

Market insiders anticipate further price correction in imported scrap in the coming days and are therefore holding back from making purchases. However, major mills in Pakistan have kept away from actively booking scrap in the last 2 weeks, which is likely to turn them active in the market considering lower inventories.