Pakistan: Imported scrap prices surge in latest bookings

Imported scrap market of Pakistan witnessed a rebound in prices since latter half of last week, supported by improved demand from domestic steel mills as well as global uptick over the last week. In spite of the hike, the market remained active with numerous deals getting concluded at successively rising price levels, while on the other hand, some suppliers held back slightly, on anticipation of further price hike.

Shredded: SteelMint's assessment for Shredded 211 scrap from UK/Europe stands at $283-285/t CFR Qasim, up by around $7-9/t in comparison to $275-277/t CFR levels in earlier half of last week, and slightly increasing from $280-282/t levels at closing of last week.

-- Bookings: A Punjab region-based mill booked 2,500t of Shredded scrap at $284/t CFR Qasim earlier today, while several deals at $ 282/t CFR were reported in the last 2 days. On Friday-Saturday last week, many deals at $280/t were closed, with buyers hurrying to secure material anticipating uptrend. On an overall basis, over 11,000t of imported Shredded scrap has been booking in the last 4-5 days.

--Offers and Bids: Most fresh offer for shredded 211 now stand at $285/t CFR levels from UK, with some offers also reported at around $283-284/t from European origins. While many mills are bidding at $280-281/t CFR, up from $274-275/t bids last week.

HMS: HMS offers stayed relatively stable, with few offers from UAE, Barhain and other gulf origins observed at around $270/t CFR for premium HMS 1 material, and 255-265/t for a wide range of HMS 1&2 (with ci gi) as per quality, with very limited HMS trades reported.

Market participants' insights

"Scrap availability has moved down again, driving prices up, while domestically, billet prices have remained firm, supporting mills to purchase amid increasing global offers" Shared a prominent Karachi based steelmaker.

"Bookings have been active over the last week, but with monsoon slowdown here now, sluggish steel demand will eventually pull-down interest for scrap, and some price correction can be expected in the coming weeks." Shared a Punjab based Steelmaker.

Domestic market - In a major relief to steelmakers of Pakistan, Directorate of customs valuations has ruled that the standard valuation of imported scrap (shredded, HMS and Press bundle) has been pulled down to $301/t from the earlier$360/t CFR, which will help reduce the tax burden of the mills.

On calculating as per the existing tax structures, it is estimated that the total savings in taxes under new valuation, for imported scrap will be around PKR 1005/t ($6) and PKR 705/t ($4) for Re-meltable scrap.

Domestic steel prices remained unchanged from last week, with Deformed bar (Grade 60) offers by Punjab region mills standing at PKR 112-113,000/t ex plant and PKR 114,000/t for South region mills, ex plant inclusive of all taxes. However, steel prices may move down in near term on expected monsoon slowdown.

Pakistan Domestic Steel Prices as on 7th July'20