The Pakistan Association of Large Steel Producers (PALSP) has once again urged the government to support the steel sector to pull it from the crisis created due to the letters of credit (LCs) issue.
The views were expressed by PALSP leadership during an emergency meeting of the association to deal with the prevailing crisis-like situation. The members expressed fear that if the matter is not resolved within four business days, it would lead to indefinite closures of factories, leading to massive deindustrialization and loss of as many as 7.5 million jobs.
The steel industry leadership expressed profound concerns about the ongoing industrial as well as economic situation amid depleting foreign reserves and curbs on LCs, continuous rupee depreciation, tremendous inflationary pressure, liquidity crunch, and significant rise in the cost of production.
It was noted that there are 44 allied industries that are dependent on steel supply. Shutting the factories due to the non-availability of raw material would lead to irrecoverable and irreparable damage to the steel industries as once the plants enter force majeure shutdown, it would be impossible to restart the said units.
The import of steel scrap is down by a record 55 percent year-on-year (191,000 MT) for December, the sharpest year-on-year drop to date in the last 10 years.
The industry has warned of severe steel shortages in the coming months of February and March due to this. They further warned that if State Bank of Pakistan (SBP) administrative restrictions last longer than 4 business days, then steel rebar prices will cross Rs. 280,000 per ton.
The imports of scrap for December 2022 is only $100, hardly 2 percent of Pakistan’s total import bill, whereas the restriction on the scrap imports would result in a loss of at least 7.5 million jobs due to the shutting down of cement, cables, tiles, allied and construction industries.
The meeting was joined by the leading players of the long steel industry namely 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, and Pak Steel.
Highly unfortunate, we have iron ore, steel mill, coal mines, yet we can’t mine or process our steel, rely upon imported scrap… Politicians are busy in dirty politics & ruling elite in corruption