Pakistan: Imported Scrap Prices Marginally Down amid Limited Trades

SteelMint learned in recent conversations with industry participants that imported scrap offers to Pakistan have softened on account of slow buying activity in the country, as well as silence being observed in the global scrap market. Slow domestic demand due to upcoming Eid holidays and recent FBR enforcements have kept the trades limited. Participants eye further marginal correction in prices as traders have come under pressure.

SteelMint’s assessment for containerized Shredded 211 scrap from US, Europe and UK stands at USD 308-312/MT, CFR Qasim, slightly lowering by around USD 3-5/MT against last week’s report, with minor deals being concluded in this range. As per data maintained by SteelMint, the current assessment for shredded scrap is lowest level in last 2 years, as prior to this, levels below USD 308/MT were seen in June 2017.

Trades for HMS scrap further decreased, as stricter custom clearance norms for HMS have increased the clearance cost with each container is being individuality checked by govt officials on concerns of auto parts being imported in the name of ferrous scrap. The continued 3% duty on HMS having narrowed gap between the landed costs of HMS & Shredded, has further affected imported HMS sales.

Dubai origin HMS is observing low interest from buyers, in spite of offers decreasing sharply. HMS 1&2 (80:20) is currently being offered at around USD 290/MT, while higher quality HMS 1 is assessed at around USD 295-300/MT, CFR. UK origin HMS 1&2 was assessed at around USD 285-290/MT, CFR Qasim, however very limited trades were reported. Few deals for LMS bundles from South Africa were reported at around USD 265/MT, CFR Qasim.

Pakistani Rupee remained comparatively stable this week, standing at around 159-160 levels against USD.

Domestic steel market likely to strengthen post Eid; steel prices increase - It was reported that banks in Pakistan have tightened the credit for steel industry and increased interest rates by 100bps, which has in turn led to increase in finished steel prices, however with upcoming Eid holidays from 9th to 15th August along with labour shortages, demand from end users is likely to remain low. Strict tax enforcements from FBR have hit the sales hard, with the general sentiment remaining against the new tax policies, as stakeholders ask for roll back of the same.

In Northern region rebar average selling prices assessed at around PKR 116,000-117,000/MT, ex-works (USD 723-729) meanwhile Southern (Karachi region) steel mills are offering rebar at around PKR 118,000/MT.
High input cost also contributed to finished steel’s price hike, as both Bala Billet and CC Billet increased by close to PKR 1000/MT, standing at PKR 89,000/MT (USD 555) and PKR 97,000/MT respectively.