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Steel bar prices increased up to Rs 5,200 per ton




  • The steel melting industry has announced to raise the prices of steel bar (Sarya) up to Rs 5,200 pet ton in the wake of recent power tariff hike. Market sources said that the recent adjustment in the power tariff and rising cost of production have forced the steel industry to increase the prices of steel bar. “The recent raise in power tariff is much higher than expectation, therefore steel melters have decided to pass on this increment toward the consumers to avoid the industry closure,” they added. 

    Steel melters have announced to increase prices of steel bars, made of billet, by Rs 4,500-Rs 5,200 per ton. With current surge, prices of quality steel bar have reached Rs 83,000-85,000 per ton in the domestic market up from Rs 78,000-80,000 pet ton. The government has recently revised power tariff, according to which the B-3 TOD peak rate has been increased by 48 percent to Rs 18.81 per unit from Rs 12.68 per unit while its off-peak rate reached Rs 13 per unit, up by 68 percent. Most of local steel melters and re-rollers are electricity consumer of B3 category and the weighted average unit tariff increase for peak and off peak is Rs 5.4/unit, whereas peak hours are 4 hours per day. 

    Industry sources said that recent increase is only due to changes in power tariff and another raise is being expected in next few weeks as the government is likely to revise the gas tariff as well. 

    They criticised the immediate and one-time increase in the power tariff and said that it will put negative impact on the all sectors, particular steel industry. “The government should consider its power tariff policy and increase electricity tariff phase wise to protect the domestic industry,” they demanded. The massive and historical rise in power tariff would also encourage the electricity theft in the steel sector, they mentioned. 

    Prices of steel bars are likely to touch Rs 90,000 per ton mark in the domestic market in next few weeks, if government increases gas tariff, they said. They urged the government to impose Federal Excise Duty (FED) on the ship plates to rationalise its prices with billet, basic raw material for quality steel bars. Meanwhile, re-rolling mills have said that with current increase there is some Rs 700 per ton impact on their cost of production, however still they have not announced any increase in steel bar prices made by ship plates. They said that mainly ship plates steel bars consumed in Karachi and presently it is being sold at Rs 67,000-69,000 per ton. Melting industry has claimed that with current hike in the power tariff, price difference between steel bar of ship plates and billet has surged to Rs 16,000 pet ton up from Rs 12,000 as the re-rolling mills have not raised steel bar prices. In addition, there is no impact of power tariff on ship braking industry as it has no usage of electricity. 

    Copyright Business Recorder, 2013

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