Pakistani CRC and HDG mills hike prices again to offset weak currency

Pakistani producers of cold rolled (CRC) and hot dip galvanized (HDG) coils have revised their offer prices upwards for the fourth time in January given the continuous devaluation of the national currency against the US dollar coupled with severe shortages of raw materials due to the impossibility of opening letters of credit (LCs). At the same time, in the import HRC segment, a lull has been seen in business activity as no new import offers have been voiced in Pakistan due to the issue regarding letters of credit.

More specifically, following a PKR 10,000/mt ($38/mt) increase announced last week, on January 30 local prices for CRC and HDG have increased again, but this time by as much as PKR 20,000/mt ($77/mt) compared to the previous offers. The sharp drop in the value of the Pakistani rupee against the US dollar to an all-time low is one of the main reasons for the revision of prices. Besides, according to a source, “There is a great shortage of raw material as LCs cannot be opened due to low forex reserves.”

Notably, this week the rupee’s official value has depreciated 11.23 percent against the dollar since the start of the 2022-23 fiscal year, which ends on June 30, surpassing the previous all-time high of 240 rupees in July 2022. Furthermore, the rupee is expected to plunge further against the US dollar unless the inflow of foreign currency improves.

Meanwhile, according to market insiders, no new import HRC prices have been heard in Pakistan this week. In particular, the indicative import offers for SAE1006 HRC are estimated at around $670-680/mt CFR, though, according to market insiders, this level is just an estimation and is not tradable. “Import HRC offers cannot materialize as the government is not releasing US dollars for new LCs,” a mill’s representative told SteelOrbis.

All prices on Pakistani rupee basis include 17 percent VAT.

$1 = PKR 260.18