Steel crosses Rs200,000 on supply chain disruptions – Journal

KARACHI: Steel bar price surged above Rs200,000 per ton due to severe supply chain disruptions, shortage, sharp increase in cost of inputs and utilities as witnessed by attributed manufacturers in their messages to construction industry stakeholders.

For example, Amreli Steels Ltd (ASL) quoted the new price of Rs201,000 per ton for 9.5/10mm and 12mm and Rs 199,000 per ton for 16mm and above.

Faizan Steel has published the price for 10mm-12mm at Rs200,500 per ton and Rs198,500 per ton for 16mm-25mm.

The steel bar price in November 2020 was Rs 110,000-113,000 per ton which has almost doubled in just over a year driving up the construction cost in addition to sending many small players out of business.

The government asked to subsidize building materials

During the third week of January, Pakistan Association of Major Steel Producers (PALSP) Secretary General Wajid Bukhari said that due to weak weather-related demand, prices for steel bars in the north had been reduced to 189,000 rupees per ton, down from 194,000 rupees for a brief period.

On Monday, Bukhari said prices for the steel industry’s primary raw materials (scrap metal) rose by $120 a ton to $670 in less than a week, which would translate into a price hike of 20,000 rupees per ton in the domestic market.

This would hurt the steel industry as well as the construction industry, as any further rise in prices could suppress demand for steel, he feared.

Russia’s war on Ukraine followed by sanctions on Moscow has driven up international prices for scrap steel. The two countries are the largest producers and suppliers of steel and together export five million tonnes of scrap metal annually.

The upward trend in commodity prices, especially steel scrap, crude oil and energy, is making the situation more difficult for the local steel industry, he said.

He feared that the war and disruptions in the supply chain would have disastrous consequences on the steel sector as well as on prices. The cost of inputs is rising, leaving manufacturers with no choice but to pass the impact on to the end consumer.

Karachi Iron and Steel Merchants Association (KISMA) Chairman Shamoon Baqar Ali said that rising steel and cement prices would further slow down construction activities, which was already quite evident due to the decline in cement sales in 7MFY22.

Giving an example, he said a builder, who is now taking booking of an apartment, would find it difficult to dispose of his possession over the next two years due to a massive increase in building costs.

He urged the government to provide some sort of subsidy that could help reduce the prices of building materials. 3.120 million tons while the value jumped 30% to $1.442 billion from $1.110 billion. The average per ton fell from $355 to $587 in 7MFY21.

Posted in Dawn, March 8, 2022

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