November 26, 2018 (MLN): Flat steel manufacturer are facing tough competition from Cold Rolled Coil (CRC) products imported from Russia and Korea as the prices offered are 10% lower than that of International Steel Limited (ISL) and Aisha Steel Mills (ASL), as per a report by Multiline Securities.
The import from Russia and Korea has clearly affected the sale of CRC by local manufacturers, which was clearly reflected in the recent quarter margins of ISL & ASL. Due to the imported CRC, ISL & ASL were unable to pass on the recent currency depreciation completely and the expected currency depreciation in the upcoming quarters may further deteriorate ISL & ASL margins.
Keeping in view these intricacies, ASL Is in the process of filing anti-dumping duty on Russia & Korea. Moreover, local manufacturers are offering 1-2% discount on Secondary CRC to cut off some of the competition, whereas no discount is being given on Prime CRC as the current margins for this product stand at 14-15% and offering a discount of 5-7% seems unrealistic.
Furthermore, recent initiatives by the government on real estate sector along with weak macroeconomic issues may lead to a weaker demand outlook for Rebar in the country, the report further suggested.
As of now, 2.5% discount has been available on current price levels i.e. PKR 103k per ton in south on bulk quantity. There is no smuggling/dumping of rebar from Iran right now and upcoming capacities should trigger a demand supply imbalance in the sector, which could take some time to find equilibrium.
