Pakistan: Imported scrap prices up $3/t w-o-w; limited offers as suppliers remain on holiday

• Rebar prices under pressure, mills resort to forced sales
  
  
• UK, EU recyclers raise offers for Asian markets before holidays
  
  

Pakistan's imported ferrous scrap market experienced a year-end slowdown, with suppliers hesitant due to holiday closures and many already booked for January shipments, limiting their willingness to accommodate new inquiries.

BigMint's weekly assessment indicated that European shredded scrap stood at $392/t CFR Qasim, slightly up by $3/t w-o-w.

The imported shredded scrap offers and workable levels remain slightly higher but subdued, with limited activity. Sellers from the UAE are offering shredded scrap at $400/t CFR for a 500-t loading, under 21 free days. However, buyers are countering at $390-395/t, showing resistance to higher prices. Similarly, UK and EU shredded is being offered at $394-395/t CFR, but buyer interest is capped at $388-390/t CFR, reflected cautious sentiment.

Some deals were concluded at $388-392/t on a CFR Qasim basis.

UAE-origin HMS range-bound at $370-372/t levels and shredded at $393-398/t CFR.

Overall, market sentiment is weak, with mills resorting to forced sales for rebars. Prices for UK shredded hover around $390-393/t CFR, while UAE-origin HMS is offered at $385/t CFR. Despite these levels, many buyers refrained from making purchases last week, indicating hesitation amid poor market dynamics.

European recyclers have continued to raise their offers for Asian markets, particularly targeting India and Pakistan. UK yard prices are now reported at GBP 265-270/t ex-yard ($335-340/t), marking an increase from the last heard levels of GBP 255-260/t ($325-330/t). This translates to CFR levels of $385-390/t, factoring in freight costs of $45-50/t.

A Karachi-based mill reported that suppliers were quoting $395-400/t CFR Qasim for shredded scrap towards last weekend, driven by elevated collection costs. Buyers, however, are negotiating for larger quantities (over 1,000 t) at $385-388/t, while smaller lots (500 t) are being offered only above $390/t CFR.

The domestic steel market is grappling with liquidity constraints, largely due to year-end financial closures. Local scrap prices are steady at PKR 137,000-140,000/t ($492-504/t), while rebar is trading at PKR 240,000-245,000/t ($863-881/t) on a cash basis.

Optimism is brewing as expectations of lower interest rates and reduced electricity tariffs are likely to ease pressure on mills, potentially improving margins in the near term. Commercial bala prices remain stable, but with subdued activity.

Currently, domestic scrap prices stand at PKR 138,000-140,000/t ($496-504/t), with rebar levels slightly higher at PKR 242,000-245,000/t ($870-881/t). Billet prices are at PKR 208,000-210,000/t ($748-755/t) ex-works, while Bala billet has declined by PKR 14,000-15,000/t ($50-54/t).

Steel mills are operating at reduced production levels, averaging around 40%, with no immediate signs of a sales recovery.

Outlook: The market is expected to remain cautious as buyers push back against elevated offer prices amidst ongoing liquidity constraints. Seasonal factors, including the December slowdown and winter conditions, are likely to keep sentiment subdued. While a few shredded scrap deals are possible at $390-395/t CFR levels, trading volumes are expected to stay limited, with buyers to maintain a cautious approach in the near term.