The import of steel products including steel billets, steel bars and wire rods have registered over 118 percent growth in one year (2013-14) from 80,000 tons to 175,000 tons while consignments of around 100,000 tons are on the way to Pakistan posing a serious threat to the indigenous industry.
Industry sources told Business Recorder on Wednesday that the import of steel products under the cover of non-alloy has become lucrative business from China. A quantity of 0.0008 percent of boron is mixed in steel to convert it into alloy steel that is cleared at five percent duty while it attaches zero percent duty under the Free Trade Agreement (FTA), the sources said.
"Importers are taking full benefit of the situation," sources added. According to the sources, despite imposition of 15 percent regulatory import duty, the imported steel billets, bars and wire would be cheaper by 5,000 rupees per ton in the local market creating an unhealthy competition for the indigenous industry. The government must increase regulatory duty on steel products up to 25 to 30 percent to provide level playing field to the local industry.
Chairman of Pakistan Steel Melters Association (PSMA) Javed Iqbal has appreciated the government for imposition of 15 percent duty on import of billets, steel bars and wire rods and termed it pro-industry gesture. The local industry has now been saved from complete disaster where more than 30 percent of the furnaces had already been closed. Contrary to this decision millions of labour would have been unemployed at the steel melting furnaces, he opined.
Dumping of low and under cost imports of steel billets and other items was being done. These imports were being made by just a handful of profiteers, who can be counted on finger tips and were making windfall profits, PSMA chairman said. He said, "Level playing field to the home industry would witness growth in investment, employment and revenue collection of the exchequer. It will have a huge multiplier affect on the economy and thereby the GDP. The melting industry is already paying heavy taxes to the federal government. The sales tax paid on Steel products by the local industry is over 20 billion rupees."
Javed Iqbal further said the local steel industry has no protection but since last few months low priced and low quality Chinese Steel was being dumped into our local market as China has huge surplus of steel products. Countries like, India, Srilanka, Bangladesh, Turkey, USA, Thailand, Malaysia and Vietnam have already imposed regulatory duty at import stage from 30 to 40 percent to protect their local steel mills from unhealthy competition. Pakistan is the last country to do it. PSMA, since last twenty years is fulfilling all the requirements of the country. Quality steel has been manufactured which has been used in high rise buildings and dams, he maintained.
Pakistan Steel Mill (PSM) which is under financial restructuring also has a capacity of producing 500,000 tons of steel billets and Chinese imports were also damaging the revival efforts of the federal government which has already announced Rs 20 billion relief package for the revival of the enterprise. In financial year 2014 up to now, a quantity of more than 175,000 metric tons of billets, wire rods, finished bars, have already been imported while over 100,000 tons is on the way, he said.