The uneven jump in iron and steel prices, from Rs 282,00, to Rs 530,00 per tonne during the last week has stopped the development of both the private and public sector and has paralysed the construction industry and all other related industries.
Reliable sources informed that Pakistan Steels under a recent policy has stopped the steel supply to the selected re-rolling mills, which were taking undue advantage of the monopoly over the steel trade by extorting irrational prices from the steel traders.
The sources said that Pakistan Steel was charging a price of Rs 282,00 per tonne from its selected re-rolling mills a week ago.
However, in view of increase in international prices, a 20 percent increase was announced by the Pakistan Steels few days back which had taken the price level to Rs 338,40 per tonne but they the steel re-rolling mills had unilaterally increased the prices up to Rs 530,00 per tonne as compared to Rs 338,40 being charged by Pakistan Steels.
They were taking advantage of the situation under pretext of international price hike and were selling the rolled bars at an irrational price of Rs 530,00 per tonne.
This uneven price hike created by the re-rolling mills by and large was beyond the buying capacity of the steel consuming industries and it had affected the entire construction industry of the country, which could frustrate the government's efforts for elimination of poverty and unemployment by involving public sector.
Although the government has allowed the import of re-rollable scrap but it could not deliver the goods as the higher import duty would not allow the steel millers to bring down the prices. Government should decrease rather withdraw the import duty on scrap in order to save the construction industry.
When contacted by Business Recorder the Chairman All Pakistan Contractors Forum, Saeed Anwar has expressed dismay over this situation and said that during last week the prices of steel had risen 90 percent, sanitary items 100 to 110 percent and cement to Rs 20 per bag.
"We are not in a position to continue the work on the projects as the cost of work would go higher than the rates we are getting from the government", he said.
"We have no other option but to stop construction work, which we have already done on projects such as 15 blocks of residential quarters for government employees, Local Government Complex, registry office of Supreme court of Pakistan, Peshawar Passport Office, Income Tax Gujranwala, Residential complex of Meteorological department etc, Saeed Anwar said.
Sardar Altaf Khan another government contractor said that this monopoly of the steel millers was alarming and in fact had forced the closure of various projects and enhanced the unemployment in the country.
He said that in February and March more than 50 tenders were opened and work was allotted to contractors but so far no project had started.
"The rate given in tenders was Rs 180,00 to Rs 200,00 per tonne, which is now about Rs 540,00 per tonne, how can a contractor start work".
He said that closure of the construction industry means closure of more than 40 industries and unemployment of millions of people.
President Rawalpindi Chamber of Commerce and Industry (RCCI) Hussain Ahmed Ozgen has called upon the government to take immediate steps to redress the situation because the current situation might send an adverse signal to the intending foreign investors especially in the housing and construction sector.
China and many other countries have involved in construction of huge dams and other mega projects in Pakistan and are buying steel in huge quantity to meet the requirement of the projects.
This increase in prices would rise the cost of their projects manifold. Ozgen strongly recommended that duty on import of scrap should be waived off to allow the import of re-rollabe scrap.
He also suggested the government to look into possibility of importing steel from Iran and India, which would be much cheaper as compared to the price level in Pakistan.
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