The steel industry in Pakistan is facing a critical situation as the currency crisis is restricting the State Bank of Pakistan from opening letters of credit (LCs) leading to the closure of numerous steel businesses and widespread job losses.
The imported scrap market remained quiet for yet another week. Trade activities were absent and offers were limited.
SteelMint’s assessment for imported shredded scrap in containers is at $450-455/t CFR, down by $5/t w-o-w.
The lack of LCs has caused a severe shortage of raw materials leading to production delays and financial losses for companies. The country’s steel production may decrease by over 50% this year, with devastating consequences for the country’s economy.
All the major sectors of the economy including machinery, steel, plastic and automobiles are suffering from the decline in production.
The steel industry has requested the government and the SBP to take immediate action to prevent this disaster from becoming a reality.
PKR depreciates sharply
The national currency, the Pakistan rupee, depreciated significantly by over PKR 35 in just one week. The PKR is being traded at 267.9 against the dollar in the currency exchange market.
High demand and low supply are causing this depreciation, as per reports.
Domestic prices skyrocket
As the currency crisis deepened, domestic prices shot up to all-time highs, as per SteelMint data. Steel mills have raised finished steel prices due to severe supply chain disruptions, scarcity of scrap and a sharp increase in the cost of inputs.
Steel majors Agha, Amreli and Faizan Steel have raised rebar offers by over PKR 25,000/t.
Current offers for G-60 grade rebar (10-12 mm) are at PKR 275,000-280,000/t exw-Punjab ($1,026-1,044/t), including taxes, effective from 27 January. Tradable prices are lower by PKR 10,000-15,000/t ($37-56/t).
Due to an unexpected shortage of raw materials and the non-opening of LCs, a few major steel mills have announced the suspension of further sales and bookings of finished steel (rebar).
Further, International Steel, Aisha Steel Mills and Hadeed Pakistan Pvt Ltd. have also increased prices of cold-rolled coil (CRC) and coated flat steel products by PKR 20,000/t ($76/t).
Local scrap prices at all-time high: Domestic scrap prices are also hovering at an all-time high level as domestic suppliers are holding material due to supply disruption and raw material shortage. Fresh offers for local scrap are at PKR 180,000-190,000/t ($672-709/t) exy-Punjab, up PKR 19,000/t ($70/t) w-o-w.
Pakistan domestic prices
Leave a Reply