The recycling market is currently reflecting the weak sentiments caused by the unsettled dynamics in global steel prices due to demand being affected by the fears of Omicron variant and persistent demand slowdown from China. While the steel prices are currently down by almost 30% from their peak levels of 2021, the demand for steel will remain stable especially boosted by the recently passed USD 1 Trillion Infrastructure Bill in the US. The offer prices from end buyers of all three subcontinent markets for units available for demolition have seen a further correction of USD 10-20/LDT this week, but we expect the prices to gain ground and stabilize at these levels as the tonnage supply remains tight and with the holiday season kickstarting, it is expected to stay the same in the coming weeks.
Iron ore prices have rebounded above $100 per tonne after declining quite sharply in the past few days.
The fear of Omicron variant is hovering heavily on Oil prices taking them down to about USD 66 per barrel this week. Despite the growing demand concerns, the OPEC+ sticks to the plan of increasing production of 400,000 barrels per day for the month of January.
The travel restrictions being implemented by many countries in response to the growing concerns over new COVID-19 variant may aggravate the crew change crisis which was on its path towards easing down. Organizations and unions from across the transportation sector are warning that world leaders’ knee-jerk reactions to the Omicron variant are putting transport workers and the global supply chain at greater risk of collapse.
The high fluctuation in prices this week has kept the end buyers cautious which has resulted into a decline of about USD 20/LDT in the offer bids by end buyers.
The domestic steel prices are facing pressure from a continual decline in global HRC prices due to a sluggish Chinese demand, thereby shrinking the motivation of recyclers to secure tonnage at the current price levels.
The market witnessed limited trading activities during the week as both buyers and sellers stood on the sidelines in expectation of a price revision announcement by major steel producers to stay in tune with the global prices.
The end buyers are in a wait and watch mode to gauge the direction of prices after a continual decline in past few weeks. The domestic demand is not getting any upward push as the market activities remain subdued in expectation of a price correction.
The retail demand for finished steel remains low as the already elevated steel prices have increased the costs for construction projects by 30%. Most of the upcoming projects have been kept on hold till there is any correction in prices.
Domestic demand remains stable but the devaluation of Pakistani Rupee is inflating the cost for the end buyers thereby discouraging them to make purchases at these levels.
The devaluation of PKR has created a shortage of US Dollars in the Banks which has now led to a steep hike in the Bank charges being levied for large payments. This has dampened interest of end buyers for tonnage above 7-8k as they will have to shell out a huge premium for getting the payments processed.
Pakistan received a USD 3 Billion loan from Saudi Arabia on Saturday which is expected to ease the economic challenges, high inflation, sliding forex reserves and currency woes of the nation.
The imported scrap prices fell by about USD 5/MT whereas the domestic scrap prices remained stable.
Steel mills remained less active and held back bookings on bearish sentiments amidst a sharp depreciation in the Turkish Lira against the US dollar.
The rapid devaluation of Lira is triggering a cascade of problems for Turkey’s industrial sector as the purchase of raw materials are becoming unaffordable and the volatility is making it difficult to plan cost and profit margins.
The Turkish Lira has lost 28.3% value in the month of November alone and is currently trading at 13.70/USD.