Struggling steel sector: Increase in prices of raw material creating crisis-like situation

The drastically increasing prices of raw material are creating a crisis-like situation for the struggling steel sector of Pakistan.

During the last two years, when major players declared heavy losses, largely the steel sector absorbed the impact of increase of inputs without passing it on to the end consumer. However, it is becoming extremely difficult for the steel sector to absorb the latest impact of growing price of raw material internationally.

In this situation, the Pakistan Association of Large Steel Producers (PALSP) urged the government to remove all duties on the raw material to offset the impact of drastic increase in the cost of raw material, which is crossing $400 per ton. Contrary to the misleading statement on the part of a body of developers, the PALSP representatives in a statement said that the domestic steel bar prices have dropped over the past two years by 8pc in dollar terms, from $806 in 2018 to $746 today.

The reason that the steel prices have increased since 2018 in PKR terms is primarily due to a 45pc depreciation of the PKR against the USD, which resulted in increased prices of imported raw materials.