Pakistan: Steel Prices to Move Up on Proposed Hike in Power Tariff

The Government of Pakistan in National Budget has proposed to increase power tariff by Rs 1.5/unit to Rs 10.5/unit in terms of GST (General Sales Tax).

In line with the increase in power tariff; the steel manufactures in the country are planning to elevated their offers by Rs 2,500-3,000/MT (USD 38-45) from July 1, 2017, citing measures the government has taken in Budget 2017-18.

It is to be noted that Pakistan produced approx 3.6 MnT crude steel in CY16, which is majorly through induction or electric arc furnaces. Hence, with increase in power tariff, input cost of steel manufacturing to increase by Rs 1,000-1,500/MT.

In the national budget declaration, Finance minister Ishaq Dar said that the government has decided to increase the General Sales Tax (GST) in electricity bills for steel industry by 17% from currently Rs 9/Unit to Rs 10.5/Unit from 1st July.

Industry participants believe that, the hike in steel prices will not massively dent the sales of steel manufacturers as demand is quite healthy over the line up of major infrastructure projects in the country.

They also believe that the domestic demand in nation will continue to upsurge.

On 23rd May, the Pakistan's National Tariff Commission (NTC) has also announced a preliminary dumping margin of 53% on imports of Chinese rebars.