Pakistan: Imported scrap prices rebound on restocking demand before Eid holidays

Offers for imported scrap into Pakistan moved up sharply this week after hovering around a 16-month low till last week. However, recent trades were heard at high offers. Market participants believe that offers may climb further after the Eid holidays, which led to buyers becoming active in booking fresh slots at high offers. However, some sources expect prices to have already bottomed out and have thus resumed active bookings.

Meanwhile, a few buyers believe that this may be a temporary hike as this was the last week before the Eid holidays and suppliers, metaphorically speaking, wouldn't want to miss the train, SteelMint understands.

Around 4,000 t of imported UK-origin shredded in containers were booked at $440/t CFR Qasim. Fresh offers for the same are being heard at $440-445/t CFR, up by around $5-10/t w-o-w.

Additionally, people are active in booking UAE-origin HMS 1 scrap material for prompt deliveries to fulfill immediate requirements.

Factors leading to price hike

• PKR gains against USD: The national currency, the Pakistani rupee (PKR), gained value and was traded at 205.74 against the dollar after the currency dipped to 212 last week.
  
  
• Pre-Eid holiday bookings: With the Eid holidays approaching in the second week of July, mills are active in securing fresh slots for June-July deliveries. During Eid the market is mostly quiet, owing to limited demand from end-users due to unavailability of labour.
  
  
• Restocking in Turkey turns market sentiments supportive - Imported scrap market sentiments in Turkey have improved with restocking and improved buying interest from mills.
  
  

Pakistan domestic prices

Domestic market overview

• Liquidity issue during month-end: Pending electricity bills are required to be paid in the last 10 days of every month. Hence, steel mills face liquidity issues. It may also lead to heavy discounts on rebar prices as due to the approaching monsoon season there would be a rush to complete construction projects.
  
  
• Major mills keep rebar prices unchanged: Major steel producers Agha Steel, Amreli Steel and Moiz Steel further increased rebar offers last week. Offers for G-60 rebar (10-12mm) are at PKR 236,000/t exw Punjab ($1,122/t), including taxes. However, the tradable value is lower by PKR 6,000-8,000/t exw, depending on payment terms.
  
  

Rebar prices have increased due to the sharp hike in electricity tariffs, distribution costs and a high currency exchange rate.