Ministry of Industries and Production (MOIP) has proposed 10-15 percent regulatory duty on the import of steel products to protect the local steel industry, ministry sources told Business Recorder. They said that MOIP has decided to provide some incentives to the government owned country's largest steel producer and after detailed discussions, the ministry has decided to impose regulatory duty on the import of steel products.
They said that duty imposition on the import of steel products was suggested by Pakistan Steel Mills Corporation (PSMC) after the rising losses due to low sales in the domestic market and huge cuts in the steel prices in the world market. They said PSMC officials, at the recently held meeting of steel stakeholders in Islamabad, had demanded 10-15 percent regulatory duty on the import of major steel products to reduce the losses.
The minister of industries Manzoor Ahmed Wattoo had approved the proposal of duty imposition, they said. The sources said that during the meeting the management of Pakistan Steel had informed the participants that economic recession across the globe had forced European Union (EU), USA and India to impose 85 percent, 153 percent and 30 percent multiple duties respectively on steel products to curb dumping of cheap imports and save their local steel industries.
Therefore, some 10-15 percent regulatory duty should be imposed on the import of three major steel products, including Cold Rolled Coals (CRC), Hot Rolled Coals (HRC) and Galvanised Products (GP). The meeting has also decided that MOIP will submit a summary to the ECC proposing 10-15 percent regulatory duty on the import of HRC, CRC and GP.
They said that sales of the country's largest steel producer have been badly affected due to the depleting price trend in the international market, as PSMC has made contracts of raw materials at higher prices in April 2008 and its products are now more costlier than the international market.
A massive reduction has also been witnessed in the sales of all major steel products of PSMC due to the high prices. However the billet was the single product of PSMC, which was in demand in the domestic market and the mill is still selling billets below the cost to earn revenue.
Earlier, in another move the PSMC had made several attempts to maintain higher Import Trade Price (ITP) for the import of steel products, including CRC, HRC and GP. The sources said Pakistan Steel is also not willing for the reduction in the ITP of secondary steel products as the PS believed that after the reduction in the ITP its sales would further decline causing more financials losses.
Therefore, PSMC has also approached FBR and has written a letter for high ITP on the secondary steel products. In this connection Mueen Aftab Sheikh, Chairman Pakistan Steel, met the chairman FBR in Karachi a few months back. As a result of PSMC efforts, the ITP of imported steel products stand at high level despite the massive reduction in the steel prices in the international market. It may be mentioned here that PSMC has suffered some Rs 13 billion losses during the first nine months (July-March) of the current fiscal year due to sales.