Steel bar makers have further increased the prices by Rs2,000 per tonne citing persistent rupee devaluation, rising costs of energy and inputs and supply chain disruptions.
As per letters issued by various steel bar makers to the construction sector, Amreli Steels Ltd said effective Dec 7 the new ex-factory booking rates of (9.5/10mm and 12mm) are Rs197,500 per tonne and 16mm and above sizes at Rs195,000 per tonne (deform and extreme rebars).
Naveena Steel Mills has quoted Rs194,500 for 16-32mm and Rs196,500 per tonne for 10-12mm sizes respectively for the deformed grade-60.
The new rates of Faizan Steel are Rs196,500 for 10-12mm per tonne and Rs194,500 per tonne for 16-25mm sizes.
There has been a massive rise in the construction cost from Nov 2020 when steel bar was available at Rs110,000-113,000 per tonne as compared to current Rs197,500 per tonne.
Pakistan Association of Large Steel Producers secretary general Syed Wajid I. Bukhari said an unprecedented increase in the cost of steel scrap globally, record freight charges, massive rupee devaluation, rising cost of gas, electricity and fuel have led to massive price hikes in the domestic market.
The State Bank of Pakistan’s move to increase the interest rate to 8.75pc, which is one of the highest in the region, would not only increase the cost of doing business further high but dent any opportunity of growth within the sector, he said.
After facing crisis in FY19 and FY20, the fragile steel industry was looking to rebound but could not achieve any real growth due to supply chain disruptions and inflationary pressures. According to Pakistan Bureau of Statistics (PBS) data, iron and steel scrap imports — a major raw material used for manufacturing quality graded rebars — fell year-on-year by 33pc to 1.227m tonnes in July-October period.
He said the industry had been plagued by the continuous rupee fall hitting record low at Rs177, pushing up the import cost of raw materials.
A record rupee devaluation would directly result in an increase of over Rs9,000 per tonne. The energy cost, a vital cost component for steel making, is double to that of the regional peers.
Industrial unit effective price in Pakistan ranges between 12.28¢/kWh-16.14¢/kWh, whereas in Vietnam (7.3¢/kWh), India (6.1¢/kWh and 6.8¢/kWh in Maharashtra and Punjab) and at 6.1¢/kWh in China.
