Pakistan: Imported ferrous scrap market slows ahead of Eid holidays

• Trading slows as mills prepare for shutdowns amid labour shortages during Eid
  
  
• Scrap shortage concerns likely to emerge after holidays
  
  

Pakistan's imported ferrous scrap market remained largely subdued during the week ended 19 May, as buyers limited fresh bookings ahead of the extended Eid-ul-Adha holidays. Market participants expect business activity to remain shut from 26-31 May, with most steel mills operating at reduced capacity as workers return to their hometowns for the festive period, resulting in slower negotiations and limited deal closures despite relatively firm overseas offer levels.

BigMint assessed Europe-origin shredded scrap at around $422/t CFR, inched down $4/t w-o-w.

As per a Karachi-based steelmaker, "Hajj is expected on 26 May, followed by Eid on 27 May. Business activity is likely to remain shut from 26-31 May due to the five-day holiday period. Labourers are returning to their hometowns to celebrate Eid, forcing factories to close, which has already pushed the market into holiday mode and slowed trading activity."

Imported shredded scrap offers were heard at $424-430/t CFR Qasim, depending on cargo origin, shipment schedule, and supplier position. However, most Pakistani buyers were bidding significantly lower at around $421-423/t CFR, resulting in a wide bid-offer gap and restricting fresh transactions.

As per a UAE-based trader, "The market is slow as buyers are avoiding aggressive purchases just before Eid holidays. Most mills will reopen only in early June."

As per a Peshawar based steel mill, "Suppliers are keeping offers firm due to expectations of scrap shortages after Eid, despite weak buying interest in the market."

Market chatter indicated that Pakistani buyers increasingly approached Malaysian suppliers after lower-priced deals from smaller origins surfaced in the market, prompting suppliers to gradually raise offer levels in subsequent transactions. Meanwhile, Pakistan reportedly booked HMS 80:20 from Malaysia at around $380-385/t CFR, while Thailand-origin GI bundles were sold at $360-365/t CFR Karachi.

Market participants indicated that steel mills were operating at only 35-40% capacity utilisation, while company sales levels remained near 50%.

Domestic market indicators remained relatively stable, with billet prices heard at PKR 212,000-215,000/t ($761-772/t), Grade 60 rebar at PKR 245,000-250,000/t ($880-898/t), local scrap at PKR 145,000-150,000/t ($521-539/t), and Bala at PKR 190,000-195,000/t ($682-700/t).

Pakistan's rupee strengthened marginally against the US dollar last week, outperforming regional peers as support emerged from the State Bank of Pakistan's 100 bps rate hike to 11.5%, stable remittance inflows, and easing near-term FX pressure. However, rising crude oil import costs continued to weigh on the external account.

In the ship recycling sector, Gadani scrap prices remained firm at PKR 190,000/t ($682/t), maintaining a premium over Indian levels in dollar terms. Vessel inflows, however, stayed limited due to the narrowing monsoon trading window.

Outlook

Pakistan's imported scrap market is expected to remain quiet until Eid holidays conclude. However, tighter scrap availability and reduced bookings during the holiday period could support prices once mills return to the market in early June.