KARACHI: Despite slowing down demand for steel bars, manufacturers have revised the prices upward citing supply chain disruptions and high production costs.

“Steel bar prices have been raised by Rs10,000-25,000 per tonne in December,” Chief Executive, F.F. Steel, Zarak K. Khattak told Dawn on Thursday.

The new rates issued by many companies hover between Rs224,500-225,500 per tonne for 10mm-12mm size and Rs222,500-223,500 for 16mm-25mm size.

He said the market was also exploiting the shortage of raw materials by manipulating prices. “Dollar shortage has caused a huge drop in the import of ferrous scrap which is a basic raw material of long steel,” he added.

Mr Khattak said the situation has been further aggravated by the State Bank of Pakistan’s instructions to banks to prioritise the opening of letters of credit (LCs) for essential items.

As a result, commercial banks have informed even large steel makers of their inability to establish raw material LCs. This in turn has shot up input prices of local scrap and billets whereas end-users of steel products are also locking their orders at higher prices.

He said if steel scrap import LCs are not allowed in near future, steel bar prices would shoot up to Rs250,000 per tonne. He urged Finance Minister Ishaq Dar to add steel scrap to the essential items of the import list.

Steel bar prices hit a record peak of Rs235,000 per tonne in June this year due to an increase in the cost of energy and highly volatile rupee-dollar parity.

Published in Dawn, December 30th, 2022