There is a general feeling of unease as Pakistan’s steel sector hits a decade-low with the import of scrap steel dropping, demonstrating the low level of activity in the construction sector, which feeds a significant number of unskilled individuals.
To address the current problem, the Pakistan Association of Large Steel Producers (PALSP) leadership called an urgent meeting of the association on Monday. Leading figures from the long steel industry attended the meeting, including representatives from:
- Nomee Steels
- Naveena Steels
- Mughal Steels
- Amreli Steels
- Agha Steel Industries
- FF Steels
- Faizan Steels
- Karachi Steels
- Ittehad Steels
- Fazal Steels
- Kamran Steels
- Pak Iron
- Pak Steel
“During the meeting, the steel industry leadership expressed profound concerns about the ongoing industrial as well as economic situation as they were worried about rupee depreciation, depleting foreign reserves and curbs on LCs and significant rise in the cost of production,” said Wajid Bukhari, Secretary General of PALSP.
According to PALSP, while steel scrap import is down a record 55% YoY to 191,000 MT for the month, domestic cement dispatch is down only 9%, or 3.67 million metric tonnes (MT), year over year (YoY).
According to Bukhari, “This is the greatest YoY decline in the last 10 years, signaling huge industry shutdowns.”
This indicates that the country would probably experience a significant shortage of steel in the months of February and March. The price of steel rebar will exceed Rs280,000 a tonne if the administrative limits imposed by the State Bank of Pakistan (SBP) continue for more than four working days.
Less than 2% of Pakistan’s total import bill, or $100 million, was spent on scrap in the month of December 2022. However, if imports are prohibited, the building industry and all related companies, including as cement, cables, and tiles, will be forced to close, leaving at least 7.5 million people without jobs, according to Bukhari.
Steel sector analyst at Ismail Iqbal Securities Muqeet Naeem said, “Within the span of a month and a half, the price of rebar steel has already gone up by around Rs50,000 per tonne.”
Leading figures in the steel industry have once more urged the government to help the sector and rescue it from the crisis brought on by the LCs issue. They were especially concerned about restrictions on LC opening because, as Bukhari noted, they view the steel industry as the foundation of the economy and one of the main exporting industries in the nation.