Despite a slight drop in import scrap offer prices coupled with the approach of Ramadan, Pakistani buyers have remained inactive this week amid still slow domestic demand in the construction sector. Besides, the currency devaluation in Pakistan which has increased almost all costs and the liquidity issue seen during past weeks have affected the market.
Specifically, within the past week import offers of ex-UK/EU scrap in containers to Pakistan have fallen to $635-640/mt CFR, compared to $640-645/mt CFR last week. Accordingly, a deal for approximately 2,000 mt of shredded scrap was signed at $642/mt CFR at the beginning of the week. Besides, another small cargo for around 500 mt has been booked at $639/mt CFR. “Deals are seldom as buyers are having a difficult time passing the cost on downstream,” a market insider told SteelOrbis. Meanwhile, HMS offers from the UAE have risen by $5/mt to $620-625/mt CFR Qasim, with no deals having been reported so far.
Meanwhile, domestic prices of scrap equivalent to shredded have remained stable at PKR 123,500-127,500 ($681-703/mt) ex-warehouse. However, due to the depreciation of the Pakistani rupee against the US dollar, the dollar-based quotations have lost around $10/mt over the past week. In particular, this week, the rate of the Pakistani rupee has plunged to a record low of around PKR 181.2 against the US dollar, compared to PKR 176.5 per $1 last month, due to the expectations of an unsustainable current account deficit along with tracking emerging market currencies as traders rush to safety assets amid escalating tensions between Russia and Ukraine.
Local offers for domestic grade 60 rebar have remained unchanged week on week at around PKR 203,000/mt ($1,120/mt) ex-works.
“There should be some business activation before the holy month of Ramadan, which starts on April 2, but anyway domestic demand is likely to remain weak and import scrap offers are expected to drop further to attract buyers,” a market participant stated.