PALSP Rejects Allegations ofSelling Steel Bars at Exorbitant Rates
Business Recorder reported that Pakistan Association of Large Steel Producers have strongly rejected the erroneous impression that the steel industry is selling bars at exorbitant rates. The association explained that during the last and current fiscal year, international as well as domestic market remained highly volatile and major fluctuations in prices of steel products were witnessed due to a confluence of factors such as commodities super cycle, massive infrastructure spending by leading economies to boost their indigenous economies coupled with shortage of supply due to the adverse effects of COVID19 on a strained supply chain. Owing to an evident inflationary commodities super cycle as mentioned by a report from JP Morgan, erratic out of control prices of raw material and finished products in international market were witnessed. The prices of Steel Scrap in the international market have almost doubled in a single year from
June 2020 to June 2021. The continuous increasing trend was observed in international prices of steel products as well. The average monthly price of steel scrap as per London Metal Exchange in June 2020 was USD 260, whereas the latest price for the month of June 2021 is USD 515. Similarly, prices of Steel Rebar as per LME last year was USD 420, whereas in June 2021 FOB prices are Turkey USD 770, China USD 898, CIS USD 780. Evidently, comparing prices with leading steel manufacturing nations, the local steel rebar prices being sold are still at 24% discount to US domestic prices and approximately 17% to 15% less, than Turkey and China, respectively.
Whereas it is observed that the current local steel manufacturers are selling bars today at prices of PKR 150,500 including 17% Sales Tax, equating to USD 950 (i.e 17% cheaper than Turkish rebar). Despite facing losses and operating at very low margins, the surge in international prices of raw material leaves no option for local steel manufacturers to pass on costs to the consumer.