Steel imports halve amid economic slowdown
KARACHI: Imports of steel and scrap iron fell by over 50 per cent this fiscal year, data issued by the State Bank of Pakistan (SBP) revealed on Tuesday.
The data also showed that the import of scrap iron and steel fell by 50.6pc to $859.3 million in the first nine months of FY23 against $1,739.5m during the same period last year.
Further details disclosed that the import of iron and steel (finished product) fell by 36.6pc during 9MFY23 to $1,321m against $2,085m last year.
Iron and steel is considered as the base material for the growth of an economy. Pakistan’s economic growth for the current fiscal year is already shattered and could hardly achieve 0.5pc growth.
The sharp decline in the consumption of steel is also visible from the 11.59pc year-on-year decline in the Large-Scale Manufacturing sector in February.
According to a detailed study conducted by Pakistan Credit Rating Agency (PACRA), steel consumption in Pakistan has been declining for the last five years, while the per capita consumption in Pakistan was much below the world average.
The world average per capita consumption of steel is recorded at around 233kg. However, the highest per capita consumption was recorded in South Korea.
The low import indicates the low consumption of iron and steel which has also impacted the entire industrial sector including the construction industry as their prices had gone up to a record high with more than 100pc increase within a year.
Pakistan’s per capita consumption was lower than its neighbouring country, India with 76Kg. However, it was recorded 62kg in CY17 which fell to 53kg in CY18, 42kg in CY19, 49kg in CY20 and 59kg in CY21. The data showed that the country has no policy to improve the situation.
In CY21, about 25pc of world steel consumption was met through exports and imports. China remained the largest exporter and the US the largest importer of steel on a gross basis.
Pakistan’s annual steel products demand hovers around 13.5 million tonnes in FY22. Almost 73pc of the country’s demand is met through local production and the rest through imports.
“The major raw material used in the steel industry is iron scrap. Pakistan is an importer of raw iron and steel scrap,” said the PACRA study.
Although the country produces around a million tonnes of iron ore every year, however, Pakistan imports finished steel to cater to the industry demand.
Pakistan’s steel sector is largely competitive with 173 players registered with the Pakistan Steel Re-Rolling Mills Association. Pakistan’s steel sector is majorly driven by private corporations. Pakistan Steel Mills (PSM) – a state-owned giant with a capacity of 1.1m tonnes – has remained inactive since June 2015.
According to data released by the Pakistan Bureau of Statistics, cement production in Pakistan witnessed an 11.82pc decline during 8MFY23 and stood at 28.163m tonnes compared to 31.938m tonnes during 8MFY22.
Published in Dawn, April 26th, 2023