Pakistan: Steel prices rise amid supply shortage; imports plunge on currency crisis

Steel mills in Pakistan have been jacking up rebar prices due to shortage of raw material and logistical disruptions. Political uncertainties and the ongoing currency crisis are forcing mills to raise prices, SteelMint notes.

"Bookings are closed in the Karachi region and further price hike for finished steel items is expected in the near term," a source said.

Current offers for deformed grade 60 rebar (10-12 mm) are at PKR 300,000-301,000/t exw ($1,122-1,126/t) including taxes, effective 4 February 2023. However, tradeable prices remained lower by PKR 10,000-15,000/t.

Pakistan's steelmakers - International Steel, Aisha Steel Mills and Hadeed Pakistan - have increased prices of cold-rolled coil (CRCs) and coated flat steel products by PKR 15,000/t ($56/t), effective 10 February. This is the second price hike this month.

Higher raw material prices and depreciating currency (PKR) are the key reasons behind the price hike. The PKR depreciated to 270 against the USD from 228 in early January.

Local scrap prices continue to rise: Fresh offers for local scrap are at PKR 190,000-200,000/t($711-748/t) exy-Punjab, up PKR 10,000/t ($37/t) w-o-w.

PKR hits record low

The Pakistani rupee (PKR) has been the worst hit currency in the region and fears are that a dollar crunch might further erode its value. The Pakistani government has banned all imports except medicine and essential items.

The rupee continues to weaken faster than market expectations. Currently, it is being traded at 266.9 against the dollar.

Import scrap market dull

Due to the massive rupee depreciation, letters of credit (LC) are not being opened. As a result, imported scrap is not arriving at Pakistani ports. Currently, the market is running as per local scrap prices.

"Small mills are closed and the major mills are running on 30-35% capacity," a source from Pakistan stated.

SteelMint's assessment for imported shredded scrap in containers is at $460-470/t CFR, down $5-10/t w-o-w.