The prices of steel bar made from ship plates has surged to Rs 68,000 per ton in the domestic market after an increase of Rs 4,000 per ton. The increase was mostly attributed to the rising cost of raw material and energy crisis. Market sources told Business Recorder on Friday that unscheduled power cuts and higher price of ship plates have resulted in the price increase in steel bars (Sarya), mainly used in the construction business.
In a bid to enhance tax collection, the Federal Board of Revenue (FBR) had recently made some changes in various tax slabs of different sectors, particularly textile and steel sector, which had previously been accorded some tax relief. The FBR had increased income tax on ship breaking industry, raising it from one percent to 5 percent, while hiking sales tax payable by the industry, increasing it to Rs 5,860 per ton from the previous rate of Rs 4,840 per ton. The Ship breaking industry produces ship plates which is the basic raw material for steel bars.
“Prices of steel bar, made from ship plates, have increased upto Rs 4,000 in the domestic market. Now the steel bar made from ship plates is being sold at Rs 67,000 to 68,000 per ton in the domestic market, compared to Rs 64,000 tons previously”, dealers said. Dealers, however, said that the current price difference between steel bars of billet and steel bars of ship plate was reduced to Rs 9,000-10,000 per ton, as the price of steel bars made from billets had not been increased. The price of steel bars made from billet steel bar remained at Rs 77,000-78,000 per ton in the local market. They said that the price of steel bars had been increased by re-rolling mills because of the rising tax burden on ship breaking industry.
“Followed by massive surge in sales and income tax by the FBR, the ship breaking industry has raised prices of ship plates, the basic raw material to made steel bars, by Rs 4,000 per ton,” said Ali Ahmed, an owner of a re-rolling mill. Ship plates are now being sold at Rs 57,000-58,000 per ton. Previously, ship breakers were selling the same at Rs 53,000-54,000 per ton from Gadani, the hub of domestic ship breaking industry, he maintained.
He said that electricity outages and high price of ship plates had directly affected the re-rolling industry””s cost of production, compelling it to hike the prices by Rs 4,000-5,000 per ton. According to him, the industry was now facing unscheduled power cuts lasting more than eight hours a day.