KARACHI: Amid a declining trend in the world’s iron and steel scrap market, consumers continued to face multiple price shocks in steel bar prices in the first seven months of the current fiscal year due to massive rupee devaluation.

Manufacturers raised steel bar prices by 30 per cent from July 1, 2022 to Jan 31, as a result of a 35pc rupee devaluation which had increased the landed cost of imported items thus offsetting the benefit of the falling trend on world markets.

On July 1, 2022, one US dollar was trading at Rs204 versus Rs275 on January 31 in the interbank. Seven months back, the good quality steel bar price was Rs236,000 per tonne compared to the current Rs306,000 per tonne including the impact of a 1pc hike in general sales tax.

The Pakistan Bureau of Statistics (PBS) data showed that the average per tonne price of iron and steel scrap in January fell to $499 from $525 in December 2022, while in January 2022 the APT was $623.

Despite issues in the opening of letters of credit (LCs), total iron and steel scrap imports rose to 225,255 tonnes ($112m) in January from 191,681 tonnes ($100m) in December 2022, while in January 2022 it was 338,832 tonnes ($211m).

In 7MFY23, the imports plunged by 36pc in quantity and 43pc in value to 1.560m tonnes ($818m) from 2.455m tonnes ($1.442bn) in the same period last fiscal year. However, the average per tonne price fell to $524 from $587.

However, the import cost of scrap has dipped due to an improving rupee strength against the greenback. On Feb 3, one dollar was available at Rs276 in the interbank as compared to the current rate of Rs261.88. On Feb 3, a good quality steel bar rate was priced at Rs288,000 per tonne.

Pakistan Association of Large Steel Producers Secretary General Wajid Bukhari said scrap imports in January were the lowest in the last five years.

Manufacturers are unable to secure raw materials entering into a force majeure shutdown in the coming months. The situation is only going to get worse if the State Bank does not act quickly to facilitate LC opening,” he added.

Published in Dawn, February 21st, 2023