Following an increase in import offers for scrap in Pakistan last week, most foreign suppliers have decided to continue raising prices, securing some volumes at higher prices this week. However, trade activity has remained quite moderate as local Pakistani banks are still refusing to open letters of credit (LCs) for large volumes for most buyers. At the same time, local rebar producers have decided to revise their offer prices upwards amid “the extraordinary pressure on manufacturing costs due to the rupee’s depreciation.”
More specifically, according to sources, several deals for ex-EU/UK shredded scrap have been signed at $435/mt CFR, up by $10/mt week on week, while some have already been reported at $437/mt CFR. Meanwhile, new offers for ex-EU/UK shredded scrap have reached $435-440/mt CFR, versus $435/mt CFR last week.
Besides, more deals for ex-UAE scrap, for around 2,000-5,000 mt in total have been booked at $420/mt CFR this week, while new offers for ex-UAE shredded scrap have been voiced at $425-440/mt CFR. “There are many deals for scrap from the Middle East amid prompt delivery, while the travel time is basically from three to four days,” a Pakistani trader told SteelOrbis. Offers for ex-UAE HMS grade scrap have been heard at $400/mt CFR.
Meanwhile, this week, big rebar manufacturers have increased their local prices for 10-12 mm rebar of grade 60 by around PKR 8,000/mt ($27/mt) week on week to PKR 278,000-280,000/mt ($925-932/mt) ex-works, depending on the supplier. The tradable level, however, has been estimated at around PKR 276,000/mt ($918/mt) ex-works. “Due to the continuous and unprecedented increase in the cost of energy and the highly volatile Pakistani rupee-US dollar exchange rate, we can no longer absorb the huge price fluctuations in manufacturing costs,” one of the biggest rebar mills in Pakistan officially stated.
In the meantime, it worth mentioning that this week the Pakistani rupee has shown a dramatic fall, slumping by 20 percent, making it Asia's worst performing currency. In particular, on Tuesday, August 22, the Pakistani rupee hit a record low of 299 against the US dollar in the interbank market, while the open market rate has approached PKR 313 against the US dollar. “The rupee has continued to decline as the country's government struggles to stabilize the crisis-ridden economy,” a source said.
All prices on Pakistani rupee basis include 18 percent VAT.
$1 = PKR 300.55