Sunday April 21, 2024

Steel prices increase Rs3,500/ton second time in month

By Javed Mirza
March 10, 2021

KARACHI: Prices of locally-produced cold rolled coil (CRC) of various flat steel grades were further increased by Rs3,500/ton, second time in a month because of rise in rates in the international market, dealers said.

Price of the benchmark local prime grade of 1.2mm stands at Rs178,500k/ton. So far this year, prices of locally-produced CRC increased by around Rs19,500/ton, or 12.3 percent.

“We believe local players have managed to pass on the cost pressures since price of its raw material – hot rolled coil (HRC) – has increased by 11 percent in rupee terms and 13 percent in dollar terms,” a dealer said.

Rising local CRC price is directly related to jump in HRC prices in international markets amid global demand recovery post vaccine drive and ongoing port congestion issues especially in South Asia.

Former is indeed a significant factor in driving local prices, while the latter is turning out to be major factor as well since it is hurting CRC imports enabling local players to pass on cost pressures easily.

CRC prices in international market have been on a rising trend in the ongoing quarter, much higher than the HRC price. This is mainly on account of limited CRC imports in the backdrop of ongoing supply constraints, which led to an increase in cost and freight compelling local players to charge premium.

International margin has improved to around average $102/ton so far versus $85/ton in December quarter.

“We believe that primary margin of local players would remain better in ongoing quarter. However, quantum of inventory gains in March would be slightly lower compared to December,” an analyst at Sherman Securities said.

In the local market, a rapid recovery in the steel sector was witnessed after the decline in COVID-19 related cases. The auto segment in particular exhibited a V-shaped recovery creating robust demand for CRC.

The construction sector also picked up increasing demand for galvanised products.

The anti-dumping duties imposed on steel from China and Ukraine for five years expired on January 13. Local producers have already filed sunset review at the National Tariff Commission (NTC) for its re-imposition. The proceedings on the review have already commenced.

The antidumping duties, currently applicable, will remain intact till the conclusion of the sunset review investigation. If NTC concludes, which is the most likely scenario, the duties will be re-imposed on China and Ukraine for a period of additional five years.

NTC has also commenced antidumping proceedings against South Korea, European Union, Taiwan and Vietnam on behalf of complaint filed by the local producers.