Pakistan Association of Large Steel Producers (PALSP) has rejected what it calls “misleading allegations” of cartelization against the steel sector by the Senate Standing Committee on Industries and Production.
In a letter addressed to the Senate Chairman as well as the Chairperson of the Standing Committee on Industries and Production, the PALSP stated that such statements are based on personal interests that could damage the long steel sector which is the backbone of the country’s economy, and is passing through the most difficult times.
The Association expressed dismay over the fact that some of the Senators are putting the whole steel industry at stake by issuing statements that are not correct.
The steel industry consists of over 400 market players with fragmented players and practically there is no chance of cartelization among such a large number of players, the Association says.
The steel industry believes that the steel sector is becoming a victim of interest groups, where sustained efforts are being made for opening up barter trade and import of steel from Iran.
“All those products that are produced in Pakistan and could meet the local demand, and also meet international standards of quality, must not be allowed to be imported from any country,” PALSP said. The Association added that if such measures are taken, this could lead the industry towards closure.
Steel sector crisis
During 2018-19 and 2019-20 leading steel companies declared huge losses and many smaller ones went out of business. During 2020-21 and 2021-22 the situation improved slightly bit but again from April 2022, the steel sector is facing the worst-ever crisis and the recent unprecedented floods have added fuel to the fire. As a result, many steel mills have closed down, and many have drastically cut their production, throughout the country. The worst hit of all is the long segment of the steel sector which is engaged in the production of construction bars.
Reason for increase in prices
The Association says that the surge in prices is not artificial and is interlinked with various factors like rapid currency devaluation, the surge in prices of electricity which is a major input, an increase in prices of raw materials in the international market, high-interest rates, and drastically increasing cost of gas.
In a short span of one year (from September 2021 to Sept 2022), the price of scrap increased by 26 percent, the price of electricity increased by 79 percent, the price of gas increased by 187 percent, the Pakistani rupee devalued by 37 percent, cargo charges increased 220 percent and the financial charges increased by 107 percent.
The PALSP said that it represents a documented and transparent steel sector comprising credible players of the steel sector contributing billions of rupees in different taxes to the national exchequer.
Source: Pro Pakistan