Pakistan: Imported scrap trade remains subdued on negative domestic market sentiments

Pakistan's imported scrap trade remained subdued today despite the hike in prices. Imported scrap prices continued to move north, following the recent Turkish scrap deals. Turkish steel mills are actively restocking material ahead of the winter holidays.

In contrast, Pakistani mills are still hesitant to book any fresh slots, due to the finished steel market scenario that is yet to improve. However, some transactions appear to have been completed for small quantities.

• Offers for UK/Europe-origin shredded scrap in containers stand at $445-450/t CFR, increasing considerably by around $20/t on a weekly basis. However, buyers are still bidding at $440/t CFR levels.
  
  
• Around 1,500 t of UK-origin shredded was booked at $445-448/t CFR basis.
  
  

The country's domestic market is struggling to meet power supply, as the production has yet to improve. The increased cost of production and limited demand from end-users kept buyers cautious.

Domestic market below expectations

• PKR maintains stability: The rupee witnessed one of its most stable periods in recent times. The currency is being traded at 224.4 against the dollar. Fundamentally, the currency remained under pressure as a wider trade deficit--mainly on account of higher imports--was reported.
  
  
• Demand for automobiles drops: Auto financing has shrunk since the beginning of 2022-23, as demand has come down due to liquidity issues. Car prices shot up as soon as the government and the banks took measures to restrict the outflow of dollars by curbing imports, while new cars became expensive because local assembling depends heavily on imported parts.
  
  

Additionally, rising inflation prompted the banks to increase the policy rate. Interest rates nearly doubled, discouraging potential car buyers from making new purchases through bank loans.

• Political uncertainty impacts economic situation: Pakistan's economic crisis depends more on the political situation. The development of new economic policies and their implications in the absence of political dialogues is incomplete.
  
  
• Rebar price remains unchanged: Offers for G60 rebars are at PKR 200,000-205,000/t exw-Punjab ($890-913/t). However, tradeable prices are below PKR 200,000/t ($890/t) exw. Mills are under pressure to sell their material at lower prices. However, as winter approaches, trade activities will further slow down during the foggy weather.
  
  

Pakistan domestic prices

Outlook: Imported scrap prices continue to remain on the higher side, but market participants believe that Pakistan's scrap import trade will remain sluggish on the back of negative domestic market sentiments.