Pakistan: Imported scrap market softens further as mills stay cautious amid uncertainty

• Imported shredded bookings emerge, but sentiment remains weak
  
  
• Falling steel prices pressure scrap demand and margins
  
  

Pakistan's imported ferrous scrap market extended its downward trend this week, with prices easing amid cautious buying and continued uncertainty surrounding the Middle East. While a few transactions surfaced, overall sentiment remained fragile as mills prioritised inventory control over aggressive procurement.

Around 8,000-10,000 tonnes of UK-origin shredded scrap were booked at $420-425/t CFR Port Qasim, indicating that some mills are selectively re-entering the market at lower levels.

However, this has not translated into broader buying momentum. Offers for UK and European shredded scrap continued to hover at $425-430/t CFR, while BigMint assessed Europe-origin shredded scrap slipped to around $421/t, down $6/t w-o-w.

Lower-grade raw materials also reflected the softer tone. HMS (80:20) was offered at $385-390/t CFR, with South American cargoes heard as low as $380/t in both India and Pakistan.

UAE-based traders indicated tradable shredded levels near $420/t and busheling at $415/t, showing the overall correction trend.

A Pakistan-based market insider indicated that most mills are still hesitant to commit to large volumes. A Karachi-based steelmaker noted that buying interest remains strictly need-based, with mills waiting for clearer geopolitical signals before rebuilding inventories.

Pressure from falling steel prices

The weakness in scrap demand is closely tied to the sharp correction in downstream steel prices. Billets were reported in the range of PKR 210,000-220,000/t ($753-789/t), while rebar traded at PKR 250,000-260,000/t ($897-933/t). Market sources indicated that rebar and billet prices have dropped by nearly PKR 10,000-20,000/t ($36-72/t) in recent weeks, significantly squeezing margins for induction furnace-based producers.

Local scrap prices were heard around PKR 155,000-158,000/t ($556-567/t), with bala near PKR 190,000-195,000/t ($682-699/t), but even these lower-cost inputs have failed to stimulate strong buying interest. Mills are struggling to pass on costs amid weak construction activity and tight liquidity.

A Peshawar-based steelmaker described the market as fragmented, noting that "there are no firm benchmark rates right now-everyone is quoting based on immediate needs after the recent correction."

The subdued demand environment is clearly visible in operational metrics. Industry participants reported company sales levels at just 40-50%, with capacity utilisation also hovering in the same range. Mills continue to operate cautiously, aligning production with limited order flows rather than building stock.

Outlook

We expect the steel market to remain bearish in the near term. While reports of a potential geopolitical de-escalation may offer some support, most market participants expect scrap prices to remain under pressure in the coming days. Weak finished steel demand, volatile raw material costs, and cautious mill behaviour are likely to cap any meaningful upside.