Amid PKR Drop, Inflation, and LC Restrictions, Steel Sector's Outlook Remains Dreadful

Amid PKR Drop, Inflation, and LC Restrictions, Steel Sector’s Outlook Remains Dreadful

Pakistan’s long steel sector is facing challenging times due to the depreciation of the Pakistani rupee, rising inflation, and import difficulties caused by LC limitations. 

This has resulted in a difficult operating environment for businesses in the sector, despite recent growth in profits for Mughal Iron and Steel Ltd (MUGHAL) and Amreli Steels Ltd (ASTL) due to higher product prices.

Steel scrap, which accounts for over 60% of a rebar manufacturer’s costs, has seen its average price increase to US$439 per ton during the March quarter, a 29% increase from its low of US$339 per ton in November 2022.

Although the current price of scrap has slightly decreased, steel producers worldwide expect mill utilization rates to rise in the future, resulting in a small drop in scrap prices over the upcoming months.

Given the sluggish global economy, experts predict that the drop in scrap prices will be minimal, exacerbating the challenges faced by Pakistan’s long steel sector.

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