Imports of steel scrap in Pakistan are not remarkable in the current week. Heavy rainfall and floods in the country have slowed construction activities resulting in less demand for finished and semi-finished steel products. Only a few bookings were seen from Pakistan.
Steel Mills are operating their plants at less than 50% of their productive capacity, and steel manufacturers are considering that it will decrease to 35-40% in the first quarter of the fiscal year 2022-23. Steel mills have reduced the rebar prices due to the piled-up of stocks and less demand for steel products to increase their sales; offers for G-60 rebar remained at RS.220,000-225,000/MT.
A hike in electricity tariff has increased the cost of production. Pakistan Association of Large Steel Producers (PALSP) has requested the government to review the decision regarding the increase of RS.11.10 per unit in energy tariff under the head of Fuel Charges Adjustment (FCA). An increase of 53.68% in power tariffs has created a situation of crisis for the steel industry.
The depreciation of the Pakistani rupee continued in the current week and traded at RS.229 despite the confirmation of investment by Saudi and Qatar. Pakistan has a relief of IMF tranche this week. Pakistan’s economic condition is under pressure due to a decline in foreign reserves and Foreign Direct Investment (FDI).
Floods in Pakistan have worsened the situation as hundreds of death, loss of livestock, and damage to roads, bridges, and railway networks, slowed down business activities and even impediments to the delivery of aid in the affected areas and the shifting of victims to safe places. Experts’ opinion that in 2-3 weeks flood situation will get better as monsoon season will end and may raise the demand for steel products which will raise the demand for steel scrap, ultimate increase in imports of the steel industry.
Gujjar steel, a significant producer of steel bars in Pakistan, has halted its production for 20 days in response to a fall in demand due to heavy rainfall and floods.
