KARACHI: Closure of units at Pakistan Steel Mills has overshadowed the performance of private steel industry which recorded a growth of around 6 per cent during July-March of fiscal year 2016 on top of 24.5pc growth during the same period last year,” said a recently issued State Bank report on “The State of Pakistan’s Economy.”

The financial year 2016 proved vital for steel manufactures as Chinese and Ukrainian cheap steel grabbed the local steel market since the local production is not competitive against the imported steel.

“The private sector steel manufacturers are facing stiff competition from cheap imported products mainly from China — a phenomenon which is impacting many steel manufacturers around the globe,” said the SBP report.

According to SBP report, Britain in particular has felt the squeeze as its largest producer Tata Steel announced plans to pull out of the country, threatening 15,000 jobs, while more than 40,000 German steel workers took to streets to protest against dumping from China.

The country would have to pay a heavy cost as billions of dollars are being spent on import of steel while the low-priced imported steel has threatened the existence of many medium and small size steel producing factories in the country. There is a fear that thousands of Pakistanis would lose jobs, if cheap steel imports are not banned or these are not made competitive with high duties on imported steel. There remained a tough resistance at political level as well as by independent economists over move to close PSM units.

The Sindh government, which opposed privatization of PSM, had earlier shown interest to buy the mills, but latter it distanced from the issue. Currently, PSM production is almost at zero level.

In a recent WTO meeting, Japan and South Korea also came under criticism for exporting steel products cheaper than they sell at home.

The report said the G7 will take steps to tackle a global glut in steel that many blame on excess production by Chinese producers of steel products used in construction and cars.

The government announced duties on imported steel which were imposed in January 2016, vary in the range of 8.3 to 19pct but the import is continuing.

According to an earlier report of SBP, the commodity’s imports stood at $1.3bn during the first eight months (July-February) of this fiscal year compared to $1.8bn during the entire fiscal year 2015.

The steel imports could cost the country up to $2.2bn at the end of this fiscal year as demand for the commodity is on the rise amid robust construction activity.

A significant rise in infrastructure projects in the wake of China-Pakistan Economic Corridor (CPEC) is also expected to accelerate demand for iron, steel and cement.

“Imports of both steel scrap and steel products increased by 27.3 per cent and 30.1 per cent, respectively, during July-March FY16,” said the SBP report.

“The imports posted extraordinary growth despite imposition of anti-dumping duties for four months on import of cold-rolled coils and sheets from China and Ukraine,” said the report.

Published in Dawn, July 10th, 2016