Steel industry rejects 'false' statements against steel sector

ISLAMABAD: The steel sector of Pakistan strongly rejects the "irresponsible" statements made by the Chairman, Association of Builders and Developers (ABAD) and Builders and the baseless claim of accusing steel sector cartelization or conspiring against the PM's Naya Pakistan Housing Scheme.

"The Pakistan Association of Large Steel Producers (PALSP) wants to make it clear that the most recent increase in the prices of steel bars is a result of drastic increase in steel melting scrap prices internationally. This phenomenon is not confined to Pakistan as it is happening the world over and is due to shortage of scrap in the international market caused mainly by Covid related supply chain disruptions but also due to heavy snowfall in many countries, which reduces the collection of scrap. Resultantly, the prices of raw material internationally have shot up from USD 305 in August 2020 to current bookings of USD 470. This price may further rise in the international market.

"Statements made by ABAD are completely illogical. How can an industry where there are over 300 manufacturers of steel bars collude to fix prices? Due to intense competition, steel prices are normalized very efficiently and this is evident in industry margins, which are as low as 3% currently. The entire aim of cartelization is to have abnormally high profit margins, which is clearly not the case in the steel industry.

"Over the past two years, steel manufacturers have absorbed massive cost increases on account of PKR depreciation, energy costs and taxation measures that have brought industry profit margins to bare minimum and many times in the negative territory in order to provide cost effective material to government and housing projects. However, the latest increases in raw material are too large to absorb and will have to be passed on to the consumer.

In fact, we believe construction projects of national importance will only be achieved if all stakeholders support each other rather than exhibit such childish behavior as some members of ABAD are currently doing.

"We believe the current hike in raw material prices is temporary and may only last for the next three to four quarters. We have also approached various ministries in the government to apprise them of such a temporary phenomenon and how we can work together to mitigate the impact."

"The Association of Large Steel Producers (PALSP) have approached all the Ministries to take cognizance of this phenomenon and have suggested temporary measures to reduce import tariffs on raw materials and sales tax in order to mitigate this temporary phenomenon."-PR

Copyright Business Recorder, 2020