In 16 August 2023, Pakistan witnessed its second consecutive surge in steel prices. This upturn in steel costs is attributed to a confluence of factors, which encompass:
- Escalating Raw Material Expenses: The costs of pivotal natural elements integral to steel production, such as iron ore and coal, have experienced a pronounced uptick over the past few months. Consequently, steel manufacturers find their profit margins under strain, necessitating the transfer of these heightened expenses to end consumers.
- Escalating Inflation: Pakistan has observed a steady climb in inflation rates during recent months, contributing to the overall escalation in steel prices. As the general cost of living rises, individuals tend to curtail discretionary spending, including areas like construction. This trend further dampens the demand for steel.
- Impact on Construction: The second surge in steel prices is expected to adversely affect the construction sector, which stands as a notable consumer of steel products. Additionally, the repercussions might extend to augmenting prices across other domains reliant on steel, such as the automotive and manufacturing sectors.
The exact duration for which the surge in steel prices will persist remains uncertain. Nonetheless, the driving forces behind these price hikes are anticipated to remain influential in the immediate future, potentially resulting in continued cost escalations over the forthcoming months.
Second notable increase in domestic steel prices
Lahore: During the month of August, there has been a second notable increase in domestic steel prices, driven by the persistent rise in costs associated with raw materials and the ongoing upward trend in inflation rates.
Following this recent adjustment, the prices of domestic steel rebar have experienced a substantial surge of approximately PKR 10,000 per ton. These revised rates have officially come into effect as of today. According to reliable sources, the current retail price range for steel has now settled within the bracket of PKR 270,000 to PKR 280,000 per ton. It is worth noting that in the preceding period, steel rebar prices had already escalated, ranging between PKR 260,000 and PKR 267,500 per ton.
The repercussions of this consistent upward trajectory in steel prices are being acutely felt within the construction sector, which is grappling with the economic strain caused by these escalations. Stakeholders in the steel manufacturing sector attribute these price hikes to multiple factors, including acute shortages in raw materials and a noteworthy upswing in the fundamental power tariff.