The PKR was devalued over the past week by the State Bank of Pakistan (SBP) in order to try and secure a bailout package from the International Monetary Fund (IMF). The PKR depreciated 26-28 percent from late 2017 to late September and has now declined another 7-8 percent.
Scrap importers in Pakistan are expected to limit purchases in the interim as they wait for the currency to balance but are expected to return to the import scrap market due to limited scrap inventories and limited recourse in the domestic market. Additionally, with the devaluation of the PKR, domestic prices of both raw materials and finished steel products are expected to increase, thereby allowing buyers to consider scrap imports.
A source noted that local shredded scrap is approximately at PKR 56,000-56,500/mt ($427-430/mt) ex-works Punjab, inclusive of taxes, thereby allowing room for the import of containerized shredded scrap from the EU and UK at “deal prices most likely slightly below the offers of $355-365/mt CFR Qasim,” down $5/mt from the $360-370/mt CFR offer level reported on October 3. The source noted that given the global scrap market strength, offers are expected to remain relatively stable to Pakistan.
USD = PKR 123.44 (Oct 3)
USD = PKR 131.28 (Oct 15)