Manufacturers increased steel bar prices on Friday to an all-time high of Rs277,000 per tonne, blaming the significant devaluation of the rupee and growing costs of raw materials for driving up the cost of production.
The steel producers delivered the second price shock of Rs22,000 per tonne less than a week after boosting the rates by Rs10,000, despite weak construction activity as seen by declining cement sales between July and December 2022–23.
The cost of construction has increased by 60% in less than a year due in part to the soaring prices of crucial building components.
A new tariff of Rs. 277,000 per tonne for 9.5/10mm–12mm and Rs. 275,000 for 16mm and above has been announced by Amreli Steels Ltd. Due to a serious lack of raw materials, the company has informed its customers that it is unable to accept fresh orders.
The revised pricing from Agha Steel Industries are Rs. 273,000 per tonne for 16-32mm and Rs. 275,000 for 10-12mm.
Naveena Steel Mills has announced a revised tariff of Rs273,000 for 16-32mm and Rs275,000 per tonne for 10-12mm, ending the booking due to backlog and material scarcity.
Faizan Steel has set the price at Rs275,000 for 10-12mm and Rs273,000 for 16-25mm, with all new orders pending confirmation. For 10-12mm and 16-12mm, respectively, Itehad Steel has increased the price to Rs272,000 and Rs270,000.
FF Steel Chief Executive Zarak K. Khattak told Dawn that 150 of the thousands of containers still stranded at the port are transporting steel scrap.
When asked why steel prices have been increased so mercilessly, he said that imported consignments are cleared at the prevailing rupee-dollar parity but currently banks are not releasing the documents, forcing manufacturers to lift scrap from the open market at exorbitant rates since the start of this month to run their units. “Scrap dealers, who also have old stocks, are now fully cashing in on the situation,” he added.
He claimed that market dynamics, exchange rates, and the price of scrap metal around the world all affect steel bar prices.
Many factories, according to Mr. Khattak, were running low on scrap stocks, and the situation would get worse after February 20.
“No new letters of credit are being opened due to the uncertain dollar rate while banks are also creating hurdles. Steel bar is the base of any construction project and any closure of the steel bar industries will lead to the collapse of industries like cement, sanitary, tiles, wooden work, aluminum, paint, etc,” he feared.