This refers to the editorial, titled "The rapidly rising steel prices", of the daily 'Business Recorder', Karachi of 09.03.2004. Pakistan Steel is appreciative of the concern shown by the daily on such an important issue.
However, certain points pertaining to Pakistan Steel need clarification which is as under:
"Firstly, it is incorrect to state that Pakistan Steel has increased the prices of its products within a short span of four days. As a matter of fact, no price increase was announced on 01.03.2004.
Secondly, the contentions of the Chairman Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) are also not based on facts. Contrarily, the price of pig iron, three months ago, was Rs 13900 per ton and not Rs 12000 per ton. Likewise, the current price of pig iron is Rs 18200 per ton instead of Rs 25,000 per ton, as claimed by the Chairman (PAAPAM).
However, Pakistan Steel appreciates the Chairman (PAAPAM) for indicating artificial shortages created by black marketers. As regards steel sheets, it may be noted that current average price of Pakistan Steel Coils/Sheets is Rs 36,015 per ton (in case of HR), and after addition of taxes the market price must not exceed Rs 43,000 per metric ton.
It may also be noted that even in the case of long term contract the prices are revised every year by the suppliers.
As such, it may not be assumed that Pakistan Steel 'has to incur additional cost' because of rise in the prices of iron ore and other inputs internationally.
The sharply rising trend in the prices and freight charges of raw materials including iron ore and coal are compelling factors for Pakistan Steel to revise its prices.
It may, however, be appreciated that, despite all unfavourable factors, the current prices of Pakistan Steel products are still far lower as compared to the international prices of similar products.
It may further be noted that the overall market share of Pakistan Steel in the domestic market is less than 30%, whereas the balance demand of 70%, steel requirement is met through imports, through the ship breaking industry and steel melters, who also depend on imported scrap.
As a matter of fact, the market prices are more or less determined by these dominating sources of respective steel items. Pakistan Steel, with its meager share in the market, can never be in a position to dictate its terms or take undue advantage.
The international market for scrap and ship plates has gone up, resulting in the low supply of steel from these two sources, for steel consumers.
It may be add here that unscrupulous elements involved in hoarding and black marketing, as also indicated by the Chairman (PAAPAM) are to be held responsible for exploiting the current situation.
As far as pig iron (which is used in foundry and farm machinery manufacturing units) is concerned, Pakistan Steel has recently taken measure to step up its production of pig iron for the market in spite of the fact that the basic function of Pakistan Steel is to produce steel and not Pig iron.
Pakistan Steel is persistently running at its maximum capacity level, and the capacity utilisation during July-Feb 2004 was 96%; which must clear all doubts about the efficiency of this mega industrial set-up of the country.
The fact of the matter is that, because of the shortage and high prices, the sources serviced by the imported materials are facing difficulties and the total pressure has been shifted to Pakistan Steel."
(The writer is Incharge (Public Relations) Pakistan Steel.)