Steel prices cross Rs100,000-per-ton mark

Demand expected to remain robust even as cost of production increases

Bilal Hussain June 21, 2018

Inputs in steel production depends on the import of some raw material, hence its cost is also affected by the value of dollar in the country. PHOTO: REUTERS

KARACHI: The price of steel has crossed the Rs100,000-per-ton barrier for the first time in the country’s history after a weaker rupee pushed companies’ hand to raise rates on Wednesday.

According to Taurus Securities’ research analyst Hamdan Altaf, the cost of steel generally used in Pakistan - G60 and G40 - has crossed the Rs100,000 mark for the first time. However, some high-quality steel, made on order, may have been sold above this price mark from even before. The steel was previously being sold at around Rs97,000-98,000.

Inputs in steel production depends on the import of some raw material, hence its cost is also affected by the value of dollar in the country. Since the dollar has increased to almost Rs122 (in the inter-bank market), the increase in steel prices was expected.

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However, the price increase is not expected to affect robust demand. “There’s immense demand from the construction side and dams are also being built. This price increase will not affect sales,” Altaf told The Express Tribune.

Moreover, several CPEC-related infrastructure projects are also under construction.

Although demand may remain intact despite the price increase, it will be the middle and lower-middle class that will be most affected, according to Association of Builders and Developers (ABAD) Senior Vice Chairman Fayyaz Ilyas.

Ilyas said the price of cost-sensitive economic-housing projects will also increase, largely affecting the middle- and lower-middle income groups.

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He further said in addition to rupee devaluation the government has also levied additional regulatory duties on the import of raw material that has increased input prices in the construction industry.

According to reports, Pakistan has a shortfall of 12 million housing units in the country and generally, the lower-income strata of the country’s population is in need of these housing units. Around 0.4 to 0.7 million units add to this number each year.

Published in The Express Tribune, June 21^st, 2018.

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