Pakistan’s steel market showed signs of revival on Monday with demand for rebar strengthening as construction projects in the country pick-up pace. Strong demand for construction steel from the housing sector is expected in February and March, which is prompting traders to stock-up.
Pakistani mills were cautious about buying imported ferrous scrap, whose prices lost around $60/mt in the prior week. On Monday, offers rose in spite of tight supply and rising demand, to maintain better raw material supply during the high-demand period.
The daily Davis Index for containerized shredded, Monday, recovered by $5.31/mt to $435.21/mt cfr Port Qasim. Prices recovered after falling by $58-60/mt in the prior week.
There were trades of EU and UK-origin shredded in the range $435-440/mt cfr Qasim late last week and on Monday. However, most mills are still waiting for clarity.
Yards are targeting $440-445/mt cfr Port Qasim for containerized shredded. Demand is expected to return in Pakistan amid strengthening domestic fundamental and economic activities.
The daily index for US-origin HMS 1&2 (80:20) settled at $396.25/mt cfr Port Qasim, down $10/mt. The index dropped following a drop in bids for HMS, however, the US-based yards are not offering in the export markets and focused on the domestic sales due to better margins.
Some yards stayed away from making fresh offers amid the decline in prices, container unavailability, and limited vessel space. Container freight rates have gone up sharply creating a gap of over $10/mt between India and Pakistan for landed cost, including freights, for the same grade.
Suppliers from the UAE offered #1 HMS and P&S at $390-400/mt cfr Port Qasim depending on quality. The daily Davis Index for UAE-origin HMS 1&2 (80:20) settled at $388/mt cfr Port Qasim down $7/mt from Friday as many sellers were under pressure to get rid of inventories.
Market participants believe Chinese buyers could resume imports of higher grades offering support to falling prices.
Bala billet rebounds on demand
After falling below PKR95,000/mt ex-works levels, domestic Bala billet prices in Pakistan have turned up by PKR2,000-3,000/mt to PKR97,000-98,000/mt ex-works on Monday. In Lahore, G-60 billet offered at PKR105,000-105,500/mt ex-works.
On Monday, local Art Q toke scrap equivalent to a mix of HMS and P&S offered at PKR78,500-79,000/mt ex-works Lahore, while Pure Q Toke (shredded) traded at PKR79,500-80,500/mt ex-yards, up PKR2,000-2,500/mt from Friday. Limited supply and rising demand pushed domestic scrap up in Pakistan on overall positive sentiments.
In Karachi, major rebar producers offered discounts on rebars to increase sales and stimulate cashflows. Trades for G-60 rebar reported in the range PKR133,000-135,000/mt ex-works while trades for local rebar were at PKR110,000-112,000/mt ex-works.
For shipbreakers, demolition vessel offers dropped following imported melting scrap prices. Yards are waiting for prices to settle before resuming bookings.