Pakistani mills slowed purchases of imported ferrous scrap due to a continuous rise in offers. Mills started raising their rebar and billet offers to offset the impact of the power tariff hike. Typical of a month-ending trend, they focused on settling electricity and utility bills.
On February 25, the government enforced new regulation to consider replacement of fixed import tariff on steel scrap and compressor scrap imports by a metal price reporting agency, London Metal Bulletin pricing. The landed cost for ferrous scrap is expected to rise by PKR1,500/mt in the coming days. Rebar prices could rise by PKR5,000-7,000/mt to be in sync with imported scrap, according to a trader.
The daily Davis Index for containerized shredded, Friday, settled at $465.36/mt cfr Port Qasim, up $4.48/mt. Prices increased by $11.43/mt from the prior week, consequently, trades slowed. Most traders and suppliers held offers at $465-475/mt cfr Qasim, expecting better prices on high freight rates. High electricity tariffs and ferrous scrap prices kept profits under pressure for most mills, creating a liquidity crunch again.
Offers for bulk HMS 1&2 (80:20) rose in the range $455-460/mt cfr Turkey. Amid rising rebar prices in the domestic market, Turkish mills are expected to book the remaining of April shipments keeping prices on the higher side, anticipating that prices will approach earlier highs.
The daily index for US-origin HMS 1&2 (80:20) settled at $430/mt cfr Port Qasim, up by $5/mt from Thursday amid firm offers and a healthy domestic outlook for March. But buyers’ interest was limited due to the long transit period for the US materials and uncertainties about timely delivery of the shipments due to logistic challenges.
Following a global trend, trades for #1 HMS and P&S from UAE were heard at $440-445/mt cfr Port Qasim depending on quality. The daily Davis Index for UAE-origin HMS 1&2 (80:20) settled at $429/mt cfr Port Qasim on Friday. Most secondary furnaces opted for Dubai-origin HMS 1&2 (80:20) as mills found shredded offers high to maintain profits.
The weekly Davis Indexes for P&S 5ft and #1 busheling settled at $475/mt and $493/mt cfr Port Qasim, up by $25/mt and $15/mt, respectively. Only some buyers were willing to negotiate for premium grades amid a sharp jump in prices and a wide gap between bids and offers.
Domestic billet and rebar surge
Bala billet prices in the domestic market maintained an uptrend reaching PKR103,500-104,000/mt ex-works. On Friday, the weekly index for domestic Bala billet rose by PKR1,000/mt ($6/mt) to PKR103,500/mt ($655/mt) ex-works.
The Davis Index for G-60 billet settled unchanged at PKR111,250/mt ex-works Punjab. Demand is expected to pick up gradually as positive sentiment spreads across markets. The weekly Davis Index for rebar rose by PKR5,250/mt to PKR132,750/mt ex-works Karachi, while in Punjab, the index increased by PKR3,250/mt to PKR128,500/mt ex-works.
Domestic scrap up on shortage
The weekly index for Art Pure Q toke scrap equivalent to a mix of HMS and P&S, Friday, settled higher by PKR500/mt ($4/mt) to PKR82,000/mt ex-yard Lahore. After dropping early week, prices recovered above last week’s levels on Friday. Offers for Pure Q toke scrap equivalent to shredded were at PKR83,000-83,300/mt ex-yard Lahore. The weekly index for the grade settled flat at PKR83,250/mt ex-yards.
Shipbreaking scrap equivalent P&S traded above PKR85,000/mt ex-yards. For shipbreakers, offers for vessels were in the range $440-450/ldt amid improving sentiments. Availability of shipbreaking melting scrap at $15-20/mt less encouraged buyers to prefer it over imported scrap.