Pakistan: Steel Prices Surge Amid Currency Depreciation; Scrap Offers Move Up
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Yesterday Pakistani Rupee (PKR) depreciated again by almost 4% as the exchange rate PKR/USD moved up to 119-120 as against 115-116 a day earlier.
In recent conversations with market participants, SteelMint learned that National Bank of Pakistan yesterday announced the third major devaluation of Pakistani Rupees against USD since Dec'17. PKR depreciated by around 4% in a single day to 119-120 levels while by almost 13-14% in last six months' time which was trading at 105-106 levels then.
Local steel prices increased sharply - As an impact of sharp currency devaluation and firm sentiments in the domestic market, local billet, rebar and domestic scrap prices in Pakistan have moved up sharply by PKR 2000-2500/MT(USD 17-21) on W-o-W. Purchases remained strong this week ahead of approaching Eid holidays over an expectation for favorable market after Ramadan.
Current average prices for local billet (Bala) assessed at around PKR 76,000-77,000/MT (USD 639-647) and grade 60 CC billet assessed at around PKR 81,000-82,000/MT (USD 680-690), ex-plant inclusive of taxes. Domestic scrap prices stood at around PKR 55,000/MT and Rebar prices assessed at PKR 94,000-95,000/MT (USD 790-798), ex-works in Punjab region inclusive of taxes. While Pakistan's steel market likely to remain almost close on Eid holidays during 15th-19th June.
Pakistan average local steel reference prices as on 12th June -
| Average Prices in PKR/MT, Ex-work Punjab, Pakistan inclusive of taxes | |||
| Commodity | 12th Jun'18 | 1 Week ago | W-o-W Change |
| Local Scrap | 55,000-56,500 | 53,000-54,500 | +2000 |
| Bala (Local Billet) | 76,000-77,000 | 74,000-75,000 | +2000 |
| CC Billet (Grade 60) | 81,000-82,000 | 79,500-80,500 | +1500 |
| Rebar | 94,000-95,000 | 91,500-92,500 | +2500 |
Source: SteelMint Research
Imported scrap offers inch up W-o-W - The price assessment for Shredded scrap from UK and USA stood in the range of USD 380-385/MT, CFR Port Qasim, up by USD 5/MT on W-o-W basis. However, last week Pakistan witnessed strong buying for imported scrap and considerable volumes of containerized Shredded scrap have been booked at USD 375-378/MT levels. Sellers have turned positive now amid improving global scrap prices.
"Scrap importers are likely to return into the market after Eid holidays after analysing the effect of currency devaluation. Holiday mood in Pakistan has already started and activities will remain slow for next few days" - shared a source.
HMS 1&2 (80:20) scrap from UAE and South Africa assessed at around USD 370/MT, CFR Qasim. HMS 1 assessed mostly stable at USD 370-375/MT, CFR. Few minor deals towards closing last week concluded at this levels.
No bulk offers were heard. Now the worries have started for the negotiation of the document on new devalued PKR, shared a scrap importer.
On the other hand, amid sustained effect of ongoing Ramadan festive, electricity supply cuts and arriving monsoon ship cutting market at Gadani region witnessed declining sentiments again witnessing no sale concluded last week. Ship cutting prices have moved down USD 10/MT on W-o-W basis and assessed at USD 410/LDT for general dry bulk cargo; at USD 430/LDT for containers and USD 420/LDT for tankers on CNF Pakistan basis respectively.
