Karachi, May 12, 2023 (PPI-OT): Outlook remains bleak for Long Steel sector

Pakistan's long steel sector has been facing troubles owing to continued depreciation of PKR versus US$, rising inflation, low demand and impediments in raw material imports.

While recent profits for Mughal Iron and Steel Ltd (MUGHAL) and Amreli Steels Ltd (ASTL) appeared improved on higher product prices, companies are expected to continue to face challenges for a prolonged period. In addition, higher finance costs, which were also reported in the outgoing quarter, may continue to pile on to core challenges.

In efforts to pass on the rising costs, steel rebar producers significantly raised prices during the first quarter of this calendar year, and increased prices by roughly Rs68,000/ton (a net 30% increase CYTD). Steel scrap prices on the other hand also increased, average price of steel scrap during March quarter remained at US$439/ton, an increase of ~29% from its low of US$339/ton in Nov-2022.