February 20, 2023 (MLN): The Pakistan Association of Large Steel Producers (PALSP) on Monday appealed to the State Bank of Pakistan (SBP) to take immediate action to open letters of credit (LCs) in order to address the severe shortage of rebars in the domestic market.
In a letter to SBP, the association said that the situation has reached a critical level, with imports for the first seven months of FY23 down by 40% from the same period last year.
According to industry sources, in January 2023, only 220,000 metric tons of scrap were imported, the lowest January import in the last five years. Imports showed a sharp decline of 50% compared to January 2020.
This has resulted in a severe shortage of raw materials for the steel industry, with the shipbreaking industry, which accounts for 15% of all local raw material scrap, operating at only 5%.
As a result of the shortage of raw materials, the steel industry can only operate at 30% capacity utilization levels, and the situation is expected to worsen in the coming months. The shortage of rebars has also led to an increase in prices, which has affected the construction industry and caused delays in major infrastructure projects.
In response to the situation, PALSP has urged the SBP to take immediate action to open LCs to ensure the availability of raw materials for the steel industry.
The association has also called for the government to provide support to the industry by reducing taxes and duties on the import of raw materials.
The steel industry is a vital component of the Pakistani economy, and the current shortage of raw materials is a major concern for the industry and the country as a whole.
It is hoped that the government will take urgent action to address the situation and ensure the availability of raw materials for the steel industry.
