The Pakistan Steel (PS) on Monday increased the prices of billets up to Rs 2,300 per tonne in the wake of higher steel and raw material prices on the international front, sources said. The billet (100x100) is now being tagged at Rs 29,555 per tonne including sales tax, which was previously sold at Rs 27,255 per tonne (ST included).
Sources in the PS said that upsurge of PS product (billet) prices is, in fact, linked with the soaring international steel and the raw material prices and the middleman who procure commodities in bulk, earn a hefty profit by hoarding their stocks rather than facilitating the buyers.
"I think the management was awaiting the Supreme Court's verdict regarding privatisation as they suddenly raised the prices of its billets," a senior trader said.
He said that the PS has increased billet prices on every size of that material and now billets of any size would be available Rs 2300 per tonne higher than the previously tagged price. However, the local market is compelled to procure the PS material (billets) as the imported billets are currently tagged at $450 per tonne at Karachi port.
"Imported material is comparatively expensive than the PS product (billets) these days due to higher international steel prices," a trader said. Elucidating his statement, he said that the PS booked contracts for six months to procure the raw material from the international market and that is why its prices are usually tagged at lower rate than the international market.
He further said that the PS also booked six months future contracts as well as to keep itself away from the international price fluctuations.
Some of the market players are of the view that the current price rise could affect the sales of PS products because of the prevailing dull market.
Commercial importers of steel stated that it is a prerequisite that contractors, who win government tenders for the production or construction of something, must use the material made by PS and it also offers incentives to those who buy material from Pakistan Steel.
It may be mentioned here that PS had increased the price of billets on April 4 last, to Rs 1,000 per tonne on the back of same reasons quoted this time as well.
With that raise, the prices had gone up to Rs 27,255 per tonne from 26,105 per tonne.
Market sources have conservatively said that country's demand for billets stands around 500,000 tonnes annually, of which some 200,000 tons are produced by PS while the remaining gap is filled by importing this commodity from different countries, including Russia, South Africa, Ukraine, Turkey and Egypt.