Pakistan: Imported scrap prices edge up by $2/t w-o-w; bid-offer gap widens

• Rebar production capacity falls to 40-50%
  
  
• Quality, supply issues plague Pak steel sector
  
  

Imported ferrous scrap offers in Pakistan saw a w-o-w increase which widened the bid-offer gap, with BigMint assessing European/UK-origin shredded at $386/tonne (t) CFR Qasim, up by $2/t.

Market participants informed that offers were at $388-390/t, but bids are being placed below $380/t, a noticeable gap between seller expectations and buyer willingness.

As per market insiders, restocking continued at $385/t for shredded material, with offers rising to $390/t. However, buyers remain focused on securing material at the previous price levels.

Market scenario

A market participant said, "Local scrap prices are currently at PKR 147,000-148,000/t ($526-529/t), billet at PKR 210,000/t ($751/t), and rebar at PKR 245,000/t ($876/t)."

Rebar production has fallen to just 40-50% of capacity, and rebar demand remains stagnant, with prices staying within a narrow range. Local scrap supplies are tightening, further reflecting the market's weakness. This slow production rate, coupled with low bid levels, suggests a challenging outlook for the industry.

A Karachi-based steel trader said, shredded scrap from the UK/Europe is at $385-390/t, amid ongoing negotiations. However, demand remains stable, and routine trade continues.

In Karachi, 8 factories are operational-three are running at 10-20% capacity, two at 50-60%, while others remain shuttered.

However, there is no significant shortage, and demand is steady.

• Rebar: PKR 245,000-255,000/t ($870-905/t)
  
  
• Local scrap: PKR 140,000-145,000/t ($495-515/t)
  
  

Another market participant said offers for UK/EU shredded are at $390/t CFR Qasim, with workable levels around $385/t. However, buyers are still hesitant to pay above $380/t, and with the market still favouring buyers, there is ongoing pressure to push prices lower.

Recent deals

• Around 500 t of shredded from the EU was sold at $383/t CFR Qasim.
  
  
• Around 1,000 t of shredded from the EU was sold at $378/t CFR Qasim.
  
  
• Around 500 t of UK/EU-origin shredded was sold at $381/t CFR Qasim.
  
  

A Karachi-based steel mill official said that rebar sales remain stagnant, and the market continues to experience sluggish conditions. With limited activity and demand, no price changes for rebar are anticipated in the near future.

Substandard production, supply shortages weigh on steel industry

Pakistan's steel industry faces a dual crisis of substandard production and supply shortages. While the country demands 7.3 mnt of steel annually, local production only meets half of that need. The growing reliance on imports and regulatory failures has led to subpar steel, undermining public safety and hindering industrial growth.

Outlook

Market insiders predict that the stagnation in the market will persist, with no significant changes in demand expected in the near future.

Rebar sales continue to show little improvement, and the market remains sluggish, suggesting a challenging environment ahead for the industry.