Pakistan: Mills raise rebar offers to record high on tight scrap supplies

Steel manufacturers in Pakistan have pushed up prices of rebar to an all-time high of PKR 243,500/t ($1,069/t). Prices of the 16-32mm material have been hiked to PKR 241,500/t ($1,052/t) and the 10-12mm deformed Grade 60 to PKR 243,500/t ($1,063/t).

SteelMint's assessments for G-60 (10-12 mm) are at PKR 238,000/t ($1,039/t) moving up considerably by PKR 8,000/t ($35/t) w-o-w.

Steel mills are seeking the government's help in opening letters of credit (LCs) as several containers are lying at ports and a few mills are close to halting operations in case the economic situation fails to improve. But the inadequate cash flow amid low foreign reserves is forcing the government to limit opening of LCs.

Pakistan's major steel mills like Amreli Steel, Faizan Steel, and Agha Steels have revised their finished steels' ex-factory prices, effective from 16 January 2023.

Additionally, prominent flat steel producers like International Steel, Aisha Steel Mills, and Hadeed Pakistan Pvt Ltd increased prices of cold-rolled coils (CRCs) and coated flat steel products by PKR 10,000/t ($44/t), effective 16 January, 2023.

Factors behind record high finished steel prices:

• Tight scrap supplies: Domestic scrap prices are at their highest levels since September 2022 due to tight supplies. Fresh offers for local scrap are at PKR 158,000-160,000/t ($667-697/t) exy-Punjab, slightly up by PKR 2,000/t w-o-w.
  
  
• Need for maintaining conversion spread: To maintain appropriate conversion spread, mills raised their rebar offers following rising raw material prices - domestic as well imported scrap.
  
  
• Sliding currency: The cost of production will rise further as the Pakistani rupee (PKR) continues to weaken. Volatile conversion rates of the PKR against the USD and an uptrend in global steel and raw material prices continue to push mills to raise prices in January, sources informed.
  
  

The PKR declined to 228.9 against the dollar, as opposed to 228.5 recorded a week ago. As a result, the value of the national currency has eroded by PKR 400/t.

Pakistan domestic scrap prices

Imported scrap prices dip

SteelMint's assessment for shredded imported scrap in containers stands at $460/t CFR, slightly down $5/t w-o-w.

The imported scrap trade has been mostly absent in Pakistan this week due to the lack of a stable national currency in the exchange market. Despite this, prices have come down slightly w-o-w.

Outlook: The imported scrap trade is likely to remain slow in the near term. However, imported scrap prices may fall further by $10/t due to a slight decrease in global prices, SteelMint learnt from sources. Recently, a bunch of Turkish deals were concluded at lower prices.