Massive smuggling of over 100-year old Russian scrap is gripping the domestic market and marginalising the local ship breaking steel coming out from dismantling of vessels. Sources told Business Recorder that the scrap material of "Moon Phara or Half Cut Pipes" was arriving from three different routes, including Iranian border of Taftan, Afghan borders of Chaman and Waziristan since 2004.
The huge quantity is touching 0.75 to 1 million tonnes mark annually and affecting the local ship breaking industry negatively. The anticipated supplies of such scrap from Central Asian Countries were enormous, which would continue hurting local ship breakers, if not regulated under any tax slab, the source said.
Due to scrap smuggling, the national kitty is also losing substantial revenues particularly the general sales tax (GST). Another aspect is the quality of steel coming from ship-plate that have the highest mild steel properties and low carbon steel and perfect composition for making 'Tore Bars'.
The 'Tore Bars' are extensively used by the construction industry across the country, particularly in Karachi and Sindh due to its good quality, flexibility and strength. But the smuggled scrap does not posses quality and is used in water, oil and sewerage lines in the Central Asian countries. The quality of 'Ship Plates Mild Steel' is equivalent or even better than the quality of imported billets as well.
The ship breaking industry has started gaining momentum after facing hardships of several years due to high cost of light displacement tonnage (LDT) in the international market. It may be mentioned that at the time of building a ship world reputed classified societies check the quality and standard of steel used in shipbuilding.
The classified societies, including Lloyds Register of Shipping, London, American Bureau of Shipping, USA, NKK Class of Shipping, Japan never compromise on quality and specification of steel used in shipbuilding.
Owing to its sub-standard quality, this steel junk is sold at very low-price in domestic markets as compared to broken ship steel and attracting some re-rolling mill operators on pricing issue.
The domestic ship-breaking industry was on the high, when President Musharraf took over power in October 1999. During 1999, the industry paid revenue to the tune of Rs 3.53 billion, with 64 scrap ships anchoring at Gadani ship breaking yard in Balochistan coastline.
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