Long steel rebar manufacturers have continued to jack up prices and with the latest increase of Rs5,000, the price has surged to around Rs160,500 per ton.

According to Taurus Securities, the manufacturers have increased rebar prices by Rs5,000 per ton once again. This is in addition to the earlier increase of Rs5,000 per ton last week.

Current rebar prices are in the range of Rs160,500 to Rs162,500 per ton. According to the brokerage house, since November 2020, the rebar prices have gone up by 38%.

The government, understanding the importance of construction industry for economic growth, had earlier announced a special package for its revival, recalled Association of Builders and Developers of Pakistan (ABAD) Chairman Fayyaz Ilyas in a statement.

“But when construction activities resumed, the cartel of steel manufacturers raised prices of steel bars – an important component for construction – many times, making construction more costlier,” he added.

“We demand that the federal government abolish regulatory duty and additional regulatory duty on the import of steel bars to stabilise their prices so that construction industry could be saved from collapse.”

Speaking to The Express Tribune, Pakistan Association of Large Steel Producers (PALSPA) Secretary-General Syed Wajid Bukhari said that the reason behind the price hike was a consistent increase in international prices of steel scrap.

“Currently, the prices of scrap in the international market are $550 per ton, whereas a few months ago, they were $500 and even lesser before that,” he said. “This is how they impact local steel prices. We have to set local rates according to the international prices.”

Nevertheless, prices in Pakistan are 7% lower than those in Turkey and 4% less than those in China, “although we do not have any comparison with China as it is a humongous steel producer,” Bukhari added.

China produces 800 million tons of steel per year. Steel at lower prices in Pakistan compared to China “is a big deal as we absorb the constantly increasing cost of inputs.”

In the recent past, the prices of scrap have skyrocketed. The average price of steel scrap, as per London Metal Exchange (LME), in June 2020 was $260 per ton and in July 2021 the price has crossed $540 per ton.

Similarly, the prices of steel rebar in the international market, as per LME, had been $420 in July 2020 while in July 2021 the average rebar prices C&F (assuming zero duty) are $831 in Turkey and $845 in China. In comparison, the rebar price in Pakistan (without duty and landing charges on scrap) is $794.

Owing to all these conditions, he said, the situation was beyond the control of manufacturers as the domestic steel industry was largely dependent on imported raw material and prices of steel were directly related to the international scrap prices.

Pakistan’s steel industry is selling bars at lower prices by constantly reducing its margins, which have now come down to 12% as opposed to more than 19% between 2015 and 2018.

Published in The Express Tribune, July 20th, 2021.

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