The persistent increase in prices of steel has come to a halt as industry players are reducing rates in line with the demand and supply mechanism.
“Long steel industry has slashed prices of rebars by Rs5,000 per ton across the country,” said Topline Research analyst Mehroz Khan on Friday.
“The revised price in the northern region stands at Rs192,000 per ton while consumers in the southern part of the country will pay Rs188,000 per ton.”
To recall, the long steel prices had last declined in April 2021 when rates of rebars in the southern region were reduced by Rs4,000 per ton.
Citing the reason behind the recent price cut, Karachi Iron and Steel Merchants Association (KISMA) President Shamoon Bakir Ali explained that the cost of scrap had come down in addition to the slowdown in demand.
Talking to The Express Tribune, Taurus Securities’ analyst Ameer Hamza stated that the international steel scrap prices had been on the wane for the past two months, however, the decrease was insignificant. “Recently, scrap prices dived from over $500 to $465 per ton, which paved the way for the sharp reduction in domestic steel prices.”
Steel prices began climbing in December 2020 on the back of an uptick in global market, driven by the resumption of economic activities across the world following the lifting of lockdowns.
Another challenge for steel producers was the lofty freight cost of import containers and that problem had continued to persist, pointed out Hamza.
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Following the Covid-19 outbreak in Pakistan, many big players have launched real estate projects, therefore, this decline in steel prices has come as a welcome surprise for the market.
Pakistan Association of Large Steel Producers (PALSP) Secretary General Syed Wajid Bukhari remarked that the reduction in steel rates by leading players of the industry was encouraging for the consumers.
“While the international scrap prices have not declined by a significant margin, local players slashed the cost by Rs5,000 per ton,” he said.
He pointed out that the steel sector performed well in 2021 as scrap prices jumped from $445 to $560 per ton, adding that the recent drop in rates of rebars would squeeze the profit margins of companies.
JS Global analyst Arsalan Ahmed said that contraction in domestic demand for the commodity was the main reason behind the cut in prices.
“After Nasla Tower fiasco in Karachi, many builders have halted work on their projects; once they resume construction, the demand will register a sharp rise,” he said.
Published in The Express Tribune, January 22nd, 2022.
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