With bearish sentiments in the global steel and scrap markets mounting lately, import scrap activity in Pakistan has remained mostly muted this week, with most buyers holding back in anticipation of cheaper offers. Furthermore, lingering volatility in the exchange rates has continued to exert pressure on Pakistani steelmakers, making the business environment especially challenging for them. Specifically, within the past week the Pakistani rupee has deteriorated further by 0.3 percent against the US dollar to 178.203 PKR, continuing to break records. In addition, having faced a gas supply shortage, some local steelmakers based in Pakistan have temporarily been forced to suspend production, while some small furnaces have not been running as they have failed to sell billet at reasonable prices, according to sources. “The taxation issues in Punjab, which is a big market with regard to scrap consumption, exert a negative impact on the mills,” a Pakistan-based trader commented. As SteelOrbis reported earlier, the country’s Federal Board of Revenue (FBR) has decided to withdraw a federal excise duty (FED) for steel producers in the former FATA/PATA region for the fiscal year 2021-22, thereby creating a price distortion among national producers. “Due to this disparity, FATA/PATA-based producers have a chance to sell goods in the Lahore market at lower rates,” a Pakistan-based source told.
On balance, having faced a lack of support worldwide, foreign scrap suppliers have decided to decrease their offers in order to entice Pakistani customers. However, even after a decline of $15/mt compared to the levels voiced last week, offers of shredded 211 scrap of European origin in containers at $535-540/mt CFR Qasim have failed to attract much interest in buying. “Some steelmakers need to restock the material for their urgent needs and so they are buying. Overall, the Pakistani market has been extremely quiet within seven to 10 days,” a Pakistan-based trader stated. Meanwhile, ex-UAE HMS scrap prices have declined even more obviously. Accordingly, most offers have been voiced this week at $470-485/mt CFR, down $25-35/mt over the past week.
Meanwhile, the prices for local scrap equivalent to shredded in Pakistan have tumbled to PKR 116,000-117,000/mt ($651-657/mt) ex-warehouse this week, down PKR 7,000-8,000/mt ($39-45/mt) compared to the levels, valid a week before.
All prices on Pakistani rupee basis include 17 percent VAT.
$1 = PKR 178.203