On Thursday, Syed Wajid Bukhari, the General Secretary of the Pakistan Association of Large Steel Producers (PALSP), revealed a notable shift in steel bar prices. According to him, last month saw a significant drop to Rs245,000 per tonne from a peak of over Rs300,000 per tonne. However, he expressed concern about the current trend, noting that rebar prices presently fluctuate between Rs265,000 and Rs268,000. There is a fear that rates might increase if the dollar continues its upward trajectory.
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Interestingly, this surge in steel bar prices contradicts the global downward trend in iron and steel scrap prices. Data from the Pakistan Bureau of Statistics (PBS) indicates a decrease in the average per tonne price of iron and steel scrap from $580 in IQFY23 to $467 during July-September FY24. Despite this, the country imported 591,892 tonnes of iron and steel scrap ($277 million) compared to 648,510 tonnes ($376 million) in 1QFY23.
In September 2023, 200,189 tonnes of scrap arrived ($92 million), slightly lower than the 208,325 tonnes ($117.6 million) in September 2022, while August 2023 imports were 210,325 tonnes ($97 million). Wajid Bukhari asserted that global iron and steel scrap prices rose by $25-$30 per tonne over the past two weeks due to the strengthening dollar, prompting manufacturers to adjust prices to cover the higher production costs.
The dollar’s recent trading at Rs286.90 (compared to Rs276.50 on Oct 16) has fueled concerns, especially considering its peak at Rs307.10 on Sept 5. Wajid Bukhari pointed out that the subdued demand for steel products, attributed to a construction slowdown and uncertain economic conditions, has resulted in a crisis for the steel bar industry. Numerous mills have closed, and others operate below capacity, some only running for 10 days a month.
Additionally, mills facing financial strain due to loans are selling rebars at a discount to cope with the depressed demand. The construction sector is grappling with increased costs as cement prices have surged from Rs1,039 per 50 kg to Rs1,192 in the span of a year.
