Steel prices are record high due to continuous Rupee devaluation – Research Snipers

Steel prices are record high due to continuous Rupee devaluation

Rupee continues to fall against the dollar and reaches a record low to Rs124.25 according to inter-bank rates, as a result of sharp decline the steel manufacturers have raised their prices Rs100,000 per ton, this is the first time the prices have surpassed this level.

However, there is a strong demand for steel in the country in construction sector coupled with the phenomenal increase in the construction activity due to China-Pakistan Economic Corridor (CPEC).

Hamdan Altaf, research analyst at Taurus Securities said, the frequently used steel G60 and G40 have surpassed the Rs100,000 mark for the first time in the history, Express Tribune reported. The high-grade steel mentioned above was selling at Rs97,000 to 98,000 per ton earlier.

The steel production requires importing raw material which becomes costly as the dollar becomes expensive. The rupee depreciation against the dollar is the precursor of rising prices and it was inevitable.

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Another analyst Mr. Altaf said due to high demand coming from construction sector the sales revenue would not have any greater impact due to the price. Senior Vice President of Association of Builders and Development (ABAD) Fayyaz Ilyas said, the demand shouldn’t be impacted but the lower-middle class and the middle-class segment would be impacted to a greater extent.

Mr. Ilyas also said that prices of cost-sensitive economic housing projects would be raised, the small builders and the lower-middle class would be impacted. The government has also applied duties on importing raw material which increases the input prices of the construction sector.

Pakistan’s steel industry consists of complete and closely intertwined value chain mechanism—from pig iron furnaces to downstream sectors and end-user industries, there are roughly more than 600 businesses in the industry.