Manufacturers in the domestic steel industry have increased the prices of steel sheets for the second time in the ongoing month of April in the wake of rupee depreciation and passed on the price pressure to the downstream industry such as automobile and home appliance segment.
Flat steel industry players have hiked the price of cold rolled coils (CRCs) by around Rs4,000 per ton to Rs227,500 per ton. They also increased hot dipped galvanised coil (HDGC) rates by around Rs4,000 per ton to Rs238,800 per ton with effect from Friday, according to Topline Research analyst Mahroz Khan.
This was a second price hike in April and it took taking cumulative monthly increase to Rs9,000 per ton, he added.
Industry officials, who spoke on the condition of anonymity, also confirmed the hike in price of flat steel products.
International Steel Limited (ISL) and Aisha Steel Mills Limited (ASML) are the two major manufacturers of steel products that are also listed at the Pakistan Stock Exchange (PSX). Besides, a couple of unlisted players have also increased their prices.
The CRC and HDGC are mostly used in making cars, motorcycles, pipes, refrigerators, air-conditions and other electric and electronic products, it was learnt.
“Rupee depreciation is the main reason behind the surge in the prices of steel products,” Khan said while talking to The Express Tribune.
Pakistan imports raw material, like hot rolled coils (HRCs), to manufacture flat steel products. Therefore, appreciation or depreciation in rupee impacts their prices in the country.
Cumulatively, the rupee has depreciated by over 17% to Rs184.68 against the US dollar in the inter-bank market in the current fiscal year to date (July 2021-April 2022).
Another analyst noted that rupee recovered by a notable 1.9% to Rs184.68 on Friday after falling to record low of Rs188.18 a day earlier. “The industry might consider downward revision in the steel prices if rupee maintains upward trend against the greenback. It has revised down the prices in the past as well.”
Steel prices have increased significantly in the recent past. The price hike may dent demand for the products, he argued.
In the recent weeks, car manufacturers have also jacked up prices couple of times ranging from thousands of rupees per unit to millions.
An official from a leading rebar manufacturing firm in Pakistan said that the price of scrap has more than double to $680 per ton in the international market from around $300 per ton a year ago. “It is feared to hit $700 per ton soon.”
Besides, the steel industry remains a major user of power as steel making consumes huge amount of electricity. Therefore, the increase in power and gas prices has also jacked up the cost of doing business of steel producers in the country.
Amreli Steel Limited, which makes long steel products like rebars and billets, said in a brief statement late last month that “due to the continuous and unprecedented increase in the cost of scrap over the past month, increasing rupee-dollar parity and the increase in the cost of energy, we can no longer absorb these huge price fluctuations in the international market.”
To continue supplies and avoid booking closures, the new booking rates of the company’s rebars from March 28, 2022 are Rs216,000 per ton for size (9.5/10mm and 12mm) and Rs214,000 per ton for size (16mm and above), it added.
The increase in prices of rebar and other construction material like cement have caused a 15-20% slowdown in construction activities over the past three-four months in the country, a Amreli Steel high-official told The Express Tribune recently.
Published in The Express Tribune, April 9th, 2022.
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