Steel producers hike prices

Increase comes due to jump in international steel rates

KARACHI:

The flat steel producers of Pakistan have announced a hike in prices of the commodity owing to increase in rates at a global level.

According to Topline Securities, a prominent steel sector player increased the rates of cold-rolled coils (CRC) and hot dipped galvanised coils (HDGC) by Rs3,000 per ton on Thursday.

After the revision, cold-rolled coils are available for Rs205,500 per ton in the market while the price of hot dipped galvanised coils now stands at Rs216,800 per ton.

“A similar hike is expected from rest of the flat steel industry as well,” said the brokerage house in a report. “The primary reason behind the jump in prices is an uptick in international hot rolled coil prices”.

Read: Steel prices fall Rs5,000 per ton

Speaking to The Express Tribune, Karachi Iron and Steel Merchants Association (KISMA) Chairman Shamoon Bakir said that the domestic firms were slow to increase prices compared to the international ones.

Citing sources in the industry, Taurus Securities analyst Ameer Hamza said that another flat steel manufacturer had increased prices of its products by Rs3,000 per ton with effect from February 10, 2022. “The increase is in line with the hike in international hot rolled coil prices and freight cost which is currently hovering at around $813 per ton,” he said.

The analyst projected the international flat steel rates to remain on the higher side in February 2022 because the global automobile sector was on path to recovery and European steel producers were mulling cuts in production volumes to support prices. It is pertinent to mention that the automobile sector uses steel in huge quantities for production cars and spare parts.

Topline Securities analyst Mehroz Khan noted that in October 2021, cost of hot rolled coils plunged by $100-125 per ton in the international market and it was now rebounding. He recalled that during that time, the local players slashed prices by Rs8,000 per ton.

“This downtrend in the international market remained till the early days of January 2022,” he added. “However, prices of steel in the global market soared a few days back and Rs3,000 per ton hike by local players is not enough for the industry to cover its cost.”

If international prices remained at the current level, rest of the companies in steel sector of Pakistan might also increase prices to pass on the impact to the customers.

Local firms take cues from global price fluctuation and absorb price hikes if the rates fall within a few days. If the prices do not decline in a given timeframe, businessmen announce price hikes to remain competitive.

Steel sector analyst Arsalan Ahmed highlighted that steel companies had not been able to completely pass on the impact of price hike to the customers due to competition in the local market.

Published in The Express Tribune, February 11^th, 2022.

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