KARACHI: Steel bar makers have increased the prices by Rs4,000 per tonne citing a bullish trend in iron and steel scrap on the world markets.

Pakistan Association of Large Steel Producers (PALSP) General Secretary Syed Wajid Bukhari claimed that the new rates of steel bars hovered between Rs250,000-262,000 per tonne depending on the quality.

He said some loss-making mills could not pass on the needed increase due to low demand. Several units have closed recently and many declared losses and most of the mills are working on 30pc production capacity. “The steel industry is facing its worst crisis after 2008,” he claimed.

He attributed the price hike to a $20-25 per tonne rise in scrap prices in world markets due to the usually low collection of scrap in the winter.

Mr Wajid feared more price hikes due to supply chain disruption as the Red Sea Europe route was affected after attacks on shipping vessels, resulting in a rise in insurance and freight costs.

Some steel dealers said the increase in prices didn’t take effect in real terms amid sluggish demand caused by a construction slowdown in winter. Some dealers were clearing their stocks at old rates.

They quoted the rate of high-quality steel bars in the range of Rs265,000-267,000 per tonne depending on the size of 16m and above to 9.5/10mm.

Pakistan’s iron and steel scrap imports fell by 5pc and 17pc in quantity and value to 1.079m tonnes ($499m) in 5MFY24 from 1.143m tonnes ($65m) in the same period last fiscal year. The average per tonne price (APT) stood at $462 versus $529 in the above period.

In January 2023, steel bar rates were raised to Rs242,500-243,500 per tonne from Rs222,500-225,500 during the last week of December 2022 due to supply chain disruptions, rising raw material prices and high production costs.

The current predicament faced by Karachi-based industries, compounded by non-disbursement of the incremental electricity units consumption subsidy from July 2021 to October 2023, adds to the challenges already besetting the industry like currency depreciation, high borrowing costs, and substantial increases in input costs, particularly energy prices.

The subsidy, initially a breath of fresh air, now hangs in limbo, making it nearly impossible for industries to weather the storm, he said.

Published in Dawn, January 11th, 2024