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Print Print 2006-07-10

Steel bar price rise

The reasons for the price rise discussed by you have missed the main reason behind the price rise.
Published July 10, 2006

The reasons for the price rise discussed by you have missed the main reason behind the price rise.
The price rise in the international market cannot be controlled but the internal maladies and distortions caused by the maladministration of marketing and distribution by Pakistan Steel can be controlled, which have not been corrected by Pakistan Steel's administration upto date despite the strong and continued representation by this association during the last many years.
In this regard the Pakistan Steel Re-rolling Mills Association informs you that the material distribution by Pakistan Steel is to selected few rolling mills plus some middlemen. This has created a situation where the bulk of the sale/deliveries gets into a few select hands, who take full advantage of this near monopoly situation. Bars are sold on prices at the pleasure of those selected mills.
Even after the present increase the prices of Pakistan Steel are lower than the landed cost of imported billets. However, this advantage of lower Pakistan Steel prices is solely availed of by the selected rolling mills, who get supplies from P.S. and thus the prices remain high.
This association has been strongly urging Pakistan Steel to adopt broad-based marketing policies and to distribute the Steel Billets to the broadest Spectrum of re-rolling mills so that the advantage is passed on to the consumer and also difficulties of the majority of re-rolling mills may be alleviated.
The small and medium re-rolling units are not given any supplies from the PS. They have to buy their requirements from the middlemen who are even to-day charging about Rs 2000 per ton over and above Pakistan Steel's price tag.
As a result, the prices of bars is increase and substantially. If the distribution is broadened, such a situation can be avoided and a level playing field to all provided in addition to a lowering of prices of bars.
In other words the prices of bars can come down substantially even to day provided the PS management distributes its billets to the large circle of rolling mills and eliminate the middlemen.
Unfortunately, the Pakistan Steel management has ignored all our persuasion and protests and the maldistribution of steel billets and the resulting distortions continue.

Copyright Business Recorder, 2006

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