Daily Market Note — 2026-09-03

Market commentary on the global ferrous scrap trade. Not trading advice.

The read

The Pakistan market has settled into a clean three-tier structure, and the tiers are only about twelve dollars apart.

For most of the last two weeks, discussion of this market had a measurement problem: commentary carried a single cargo as its anchor while the published index sat several dollars above it. That gap has closed from both directions. The index printed $418.75 per tonne CFR Port Qasim on 1 September, easing $1.21 from the 28 August level — a small give-back that leaves it the second-highest reading in its recorded history. Separately, the most recent detailed market report assesses shredded at $417/MT CFR Port Qasim. Two houses, different methods, $1.75 apart.

What the market looks like underneath that number is more useful than the number itself. Buyer bids are reported at $410–412, deals at $413–417, standard seller offers at $420–422, premium-yard material at $425 and above, and premium UAE-origin shredded around $430. The whole standard market therefore sits inside roughly a $12 band, with the assessment near its top.

The two figures worth separating are the deal band and the offer band. Offers exceed bids by $8–12 and exceed the top of the reported deal range by $3–5. That is a market where the transaction level is known and the asking level is a negotiation, not a market where price discovery is in doubt.

Why offers sit where they do is the more interesting question, and the answer is logistics rather than demand. Freight into Pakistan is reported up around $5/MT, with container equipment shortages potentially adding another $5–6 this week and as much as $10 if availability does not improve. That is consistent with what publishers said caused the late-August move: collection and container shortages, with demand described as steady rather than strong. A cost push that is mostly about boxes has a shorter half-life than one driven by demand. If equipment frees up, the level that was defensible before the squeeze was in the low $410s.

Key moves

• Pakistan imported scrap — published index $418.75/MT CFR Port Qasim (1 September), down $1.21 or 0.29%. Most recent detailed market assessment: $417/MT CFR. Reported deals $413–417, standard offers $420–422, buyer bids $410–412, premium-yard $425+, premium UAE-origin around $430.
• Two independent sources put the premium-yard threshold in exactly the same place — $425 and above. That agreement is worth more than either figure alone. It also means an offer above $425 for ordinary material is a claim about the yard, the freshness or the equipment, not a claim about the market.
• A note for anyone who follows the published Pakistan index: the consultation on cutting it from twice-weekly to weekly Friday publication has closed, with the change effective 11 September. Observation density on the only public assessment of this trade roughly halves from that date.
• India firmed and the gap to Pakistan narrowed. The published index for shredded into Nhava Sheva printed $400.87/MT CFR on 1 September, up $3.59 or 0.90% — its fourth gain in five prints. The Port Qasim premium over Nhava Sheva has compressed to about $17.88, from roughly $22.68 on 28 August. That is the narrowest of the recent run, and it is closing because India is rising rather than because Pakistan is falling.
• Turkey — the forward curve firmed again and remains well above the physical market. Exchange contracts for steel scrap CFR Turkey closed at $385.50/MT for September and $394.00 for October, with a September-to-October contango of $8.50. The most recent physical assessments for imported HMS 80:20 into Turkey sit near $375–376/MT CFR. The nearest contract is therefore roughly $9 above the cargo market and the second month roughly $18 above it.
• That remains a shipment-month signal, not a prompt one. A forward market carrying a $9–18 premium to a physical index that has not refreshed in six sessions is optimism about a market nobody has measured recently. It argues for a premium on later loading. It does not establish a higher price for material loading now.
• A measurement caution that applies to a lot of daily commentary, including on these contracts. Reported session-on-session changes are only as good as the base they are differenced against. Where a report states how much a figure moved “since yesterday,” it is worth confirming that the prior figure quoted is in fact yesterday’s. Levels and dates are the durable objects; stated deltas are not.

Freight and shipping

No rate changed this session. What changed is that the cost push finally has a magnitude attached to it — and most of it is containers rather than freight.

Reported: freight into Pakistan up around $5/MT, with equipment constraints adding a further $5–6/MT this week and up to $10/MT if availability does not improve. That is a $10–15/MT push of which roughly a third is freight. The distinction matters because the two have different remedies: a rate is negotiated with a carrier, while equipment is often a forwarder problem. A quote that bundles them into one number cannot be argued with.

The surcharge picture is unchanged in substance for a third session:

• Far East Asia → Pakistan: $1,000 per 20ft, $1,500 per 40ft/45ft, in force. Rising to $2,000 per 40ft/45ft from 15 September (South Korea from 18 September). No revised 20ft figure has been published, and none should be inferred. The published notice states the September revision does not apply to spot bookings.
• Europe → Pakistan: $300 per 20ft, $500 per 40ft, 40HC and 45HC — unchanged.

The per-tonne arithmetic is what makes the September step material. At 25–28 tonnes of dense scrap per container, $2,000 per box is $71–80 per tonne against $36–40 for a $1,000 box. From 15 September on that lane, a 40ft box carries roughly twice the surcharge cost per tonne of a 20ft box — and because dense scrap is weight-limited rather than volume-limited, the larger box offers little offsetting payload advantage. Confirm the carrier’s maximum payload for each box type before relying on that comparison, and compare spot against non-spot booking structures for both effective dates.

Energy and regional risk. Brent settled around $95.63/bbl on 2 September and was reported near $95.07 intraday on 3 September, down about 0.6% — the first decline in four sessions. WTI was reported near $90.51. Crude above $95 continues to support elevated bunker, war-risk and insurance costs, and a single 0.6% session does not change that.

Corridor traffic remains impaired, and this note’s standing caution about how it is measured was well earned this week. Commodity vessel transits through Hormuz were reported at six on Wednesday, against eleven on Tuesday and a ten-day average near thirteen. The Tuesday figure is a revision: it was reported as four in preliminary data a day earlier, complete with a vessel-by-vessel breakdown. A count that carried that much apparent detail was wrong by seven hulls. Daily transit counts through this corridor have now been revised repeatedly, and the baseline they are measured against has shifted several times. Throughput and direction are the sound objects; a hull count is not, and a percentage built on both is worth less still.

Sanctions exposure widened in a way that reaches routing rather than just vessels. Iran’s vessel blacklist now covers 56 ships following 11 additions on 2 September, spanning crude, LNG, LPG and clean-product tankers. Iran has warned that vessels cooperating with listed ships through ship-to-ship transfer or transshipment may themselves be added. For containerised trades this reaches feeder connections, transshipment ports and vessel nomination — not only direct callers. Separately, Iraq raised oil exports to about 2.34 million bpd in August from roughly 1.35 million in July, a substantial supply offset on the crude side that should not be expected to translate quickly into lower container freight or insurance.

Destination operations remain normal. Port Qasim Authority’s programme for 3 September shows container vessels berthing and working, with no sailing, berthing or shifting cancellations. Karachi Port Trust listed ten expected arrivals across 2–3 September and continues to handle cargo. Discharge is not the constraint in this trade. Carrier cost, acceptance, routing, Gulf passage and origin container equipment are.

Supplier markets

Public UK yard and US East Coast dock buying levels were again unavailable, for a ninth consecutive week. The offer side of this market remains far better published than the cost side.

One cost-side figure did surface: UK scrap offered at GBP 255–260/MT ex-works. Against UK-origin HMS 80:20 offered at $390–395/MT CFR Port Qasim, and at current sterling rates, the implied gap between the ex-works and CFR levels is roughly $39–51 per tonne — which has to cover inland haulage, port handling, documentation, ocean freight, surcharges and margin. On comparable container lanes, freight alone accounts for most or all of that. The likeliest explanation is that the ex-works figure refers to a different grade than the material offered CFR. It is a useful reminder that any ex-works-to-CFR comparison is only as good as the grade match underneath it — establish the grade before drawing a conclusion about margin.

Elsewhere on the offer side: Middle East-origin sheared HMS was reported booked at $405–410/MT CFR Port Qasim — notably only about $9–14 below the shredded index for a different grade, which is a reminder that the shredded-to-HMS discount is not a constant and should not be applied as a rule of thumb. Yield, density, size, contamination and buyer furnace requirements determine it.

Container equipment and slot availability remain the binding supplier-side constraint for September loading, and remain unreported by any public source — the same constraint publishers identified as the cause of the late-August Pakistan move, seen from the other end of the trade.

On the demand side, the constraint is visible in the domestic chain. Pakistani mill operating rates are reported around 35–40%, with local scrap at PKR 138,000–140,000/MT, billet at PKR 216,000–218,000/MT ex-works and rebar at PKR 234,000–236,000/MT ex-works. That leaves a rebar-over-billet spread of roughly PKR 16,000–20,000 per tonne. A mill running at a third to two-fifths of capacity on a thin finishing margin has limited room to follow a rising import cost, whatever the replacement value of the material. The rupee has been broadly stable near PKR 277.5 to the dollar, so this is a demand and margin story rather than a currency one.

Non-ferrous snapshot

The standing caution about exchange price series is worth repeating, because it is the single most common source of error in secondary reporting. Official cash, official three-month and closing prices are distinct series with distinct values and distinct publication dates, and they are not interchangeable. Before using any exchange figure in a formula, confirm four things: the metal, the tenor, the price type, and the date.

Reported day-delayed three-month closing prices, correctly labelled as such:

• Copper — around $14,215.50/t, down about 0.41%.
• Aluminium — around $3,283.50/t, up about 0.08%.
• Zinc — around $3,865/t, down about 1.49%, the largest single-day fall in the complex.
• Nickel — around $16,913/t, up about 1.49%.
• Lead — around $1,894.50/t, down about 1.28%.
• Tin — around $54,232/t, down about 0.73%.

On the separately published official settlements for 2 September, two structural points are worth more than the levels. Aluminium moved into a small backwardation of about $2 between cash and three-month, completing a shift from a roughly $19 contango a week earlier — a prompt-tightening signal that is invisible if only headline levels are compared. Zinc’s cash-to-three-month backwardation narrowed to around $123 from roughly $178, with cash easing from the episode high recorded on 1 September. The prompt squeeze in zinc is easing rather than breaking.

A practical note on thresholds. Rules of the form “refresh formulas if this metal moves above X” are only usable if they name which series X refers to. Zinc’s cash and three-month legs currently sit more than $100 apart — a threshold written without naming the leg can be simultaneously triggered and untriggered. Name the series, the tenor and the date in any pricing clause or internal trigger.

Glossary

• CFR — cost and freight; the seller pays ocean freight to the destination port, the buyer carries insurance and transit risk.
• FOB / EXW — free on board / ex works; the buyer arranges and pays for onward transport, so freight is priced separately from the material.
• Port Qasim — Pakistan’s main deep-water import terminal, near Karachi.
• Nhava Sheva — India’s largest container port, near Mumbai; the reference destination for Indian containerised scrap imports.
• Shredded — processed scrap of consistent size and density, the main containerised grade into Pakistan.
• HMS 1&2 80:20 — heavy melting scrap in a standard 80:20 grade mix, the benchmark bulk ferrous grade.
• Sheared HMS — heavy melting scrap cut to size, typically denser and easier to charge than unprepared material.
• Billet — a semi-finished steel product, the intermediate stage between melting scrap and rolling rebar.
• PSS — peak season surcharge, a temporary carrier charge added to base ocean freight, quoted per container.
• 20ft / 40ft / 45ft — container sizes. Dense cargo such as scrap is limited by weight rather than volume, so a larger box does not necessarily carry more tonnes.
• Contango / backwardation — cash below forward, or cash above forward. Backwardation generally indicates prompt tightness; a contango closing toward zero and crossing into backwardation indicates prompt tightening.
• Official cash vs three-month vs closing — three distinct exchange price series. Cash settles near-immediately, three-month is the forward benchmark, and closing is a separate end-of-session series. They routinely differ materially and must not be mixed in one formula.