Pakistan: Imported ferrous scrap offers fall by $4/t w-o-w; mills trim rebar prices

Imported ferrous scrap prices in Pakistan saw a $4/t decline from the previous week, reflecting a less supportive steel market. Despite expectations for a post-Ramadan and Eid rebound, the market is sluggish. Rebar prices have been informally reduced due to weak sales and mills focus on electricity bill payments.

HMS Middle East was priced at $405-410/t, with Sheared HMS at $410-415/t. The exchange rate remains stable, however, challenges persist with LC openings, and customers are experiencing financial strains. Market participants are preoccupied with utility bill payments and cash flow arrangements this week.

BigMint's assessment for Europe-origin shredded stood at $426/t, down by 4/t w-o-w.

A steel mill official stated, "The market for finished products is very slow, with little demand. Shredded scrap is at $425-430/t, and no government projects are underway."

Around 4,000-5,000 t of shredded scrap from the UK and Europe were being booked at $425-430/t CFR Qasim throughout last week.

Domestic market: In the domestic market, Mughal Steel has reduced its Grade 60 rebar prices by PKR 10,000/t due to high inventory, bringing the average price to around PKR 245,000-250,000/t. The lack of major projects and delays in government funding for new ones have contributed to the sluggish market. Demand for finished products is weak, with no significant government projects in progress. The HMS category remains stagnant, and the CC billet is priced between PKR 216,000-220,000/t. Domestic scrap indicatives remained in between PKR 154,000-160,000/t exw level.

A mill representative said, "Despite hopes for improvement after Ramadan and Eid, the market remains sluggish. We've informally reduced rebar prices, but it's not official yet. Weak sales drove this drop. Most mills are busy paying electricity bills this week, with limited activity. We expect some recovery after the June budget announcement. Production levels remain low at around 40%, with the industry operating at 35-40% capacity."

Forex reserve: Finance Minister Muhammad Aurangzeb announced that Pakistan's foreign exchange reserves could reach $9 to $10 billion by the end of June, marking an improvement from the previous year. Speaking at the "Leaders in Islamic Business Summit" in Islamabad, he emphasized that the country's entry into the Stand-By Agreement (SBA) with the IMF was crucial to avoid economic collapse. Aurangzeb also highlighted ongoing discussions with the IMF for a longer and larger programme to ensure macroeconomic stability and structural reforms.

He identified energy as a key sector and stressed the need for collaborative efforts to improve tax collection, noting that Rs1.7 trillion in tax-related litigation is pending in tax tribunals.

Outlook: As per market observers, Pakistan is likely to witness minimal trade from the major mills, as the majority of steelmakers will keep their production levels low following sluggish demand for finished steel.