Pakistan: Scrap Importers Turn Inactive, Load Shedding Affects Local Steel Market

As per recent conversations with market participants, SteelMint learned that scrap importers have turned less active on the effect of sharply weakened billet prices, electricity supply cuts from the Government to all the steel mills and ongoing Ramadan holidays in Pakistan.

Most of the participants remain 'waiting and watching' with an expectation for further price corrections in the global scrap market. The price assessment for USA HMS (80:20) has inched down by USD 4-5/MT to USD 353/MT, CFR Turkey in the recent deals reported.

The price assessment for Shredded scrap from UK and Europe stood at USD 387-390/MT, CFR Port Qasim. Not many offers from USA suppliers were heard this week but few suppliers kept quoting Shredded at around USD 390/MT, CFR levels.

Few minor deals for imported scrap were reported at corrected prices in the market although scrap demand remained slow. In recent trade deals, HMS 1 scrap from UAE sold at around USD 380-382/MT, CFR Qasim.

Domestic billet prices in Pakistan have also come down sharply by PKR 2000-2500/MT W-o-W this week. Current average prices for local billet (Bala) assessed at around PKR 74,000-74,500/MT (USD 640-644) and grade 60 CC billet assessed at around PKR 80,000-80,500/MT (USD 692-704), ex-plant inclusive of taxes. Rebar Grade 60 prices assessed at PKR 94,000-95,000/MT (USD 813-821), ex-works in Punjab region inclusive of taxes.

Electricity supply cuts on load shedding during Ramadan - Pakistan government has ordered for electricity supply cuts owing to load shedding to steel making furnaces during Ramadan. As per updates received from sources, there is no official information about the exact number of hours of load shedding, however rumors are that all steel furnaces in the country are allowed to get electricity supply only for 12-14 hours per day which is likely to result in the decline in finish steel production and in an increase in steel prices in the local market.

Participants pointed out that small-scale steel producers are likely to shut down the mills for few days while after 7-8 days of less working, large steelmaker will turn active again and activities will speed up for scrap imports.

Power failure at Tarbela power plant - A technical fault at the Tarbela power plant today has resulted in the breakdown of electricity in most of Punjab and Khyber Pakhtunkhwa (KP). According to the power plant officials, the sudden blackout due to technical difficulties is affecting major cities in Punjab and KP regions in Pakistan. No timeline has been given as to when the repairs are expected to finish.

The present energy demand of the country is around 20,000 megawatts. The failure in the transmission lines has led to temporary load shedding in major steelmaking regions and steel industries likely to face load-shedding for at least 10 hours a day in Pakistan.

Ship breaking market at Gadani region witnessed steady sentiments. Sales continued again this week as Pakistan remained a preferred market for ship cutting for sellers. Current prices assessed for general dry bulk cargo at USD 430/LDT for containers at USD 450/LDT and for tankers at USD 440/LDT on CNF Pakistan basis. These prices have moved down by USD 5-10/MT on W-o-W. A 14,350 LDT tanker and 38,354 LDT VLCC sold last week at decent prices of USD 455/LDT and USD 430/LDT respectively.