Pakistan’s steel imports cut in half amidst recession

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Data released by the State Bank of Pakistan (SBP) on Tuesday showed that imports of steel and scrap iron decreased by more than 50% during this fiscal year.

According to the report, imports of scrap steel and iron decreased by 50.6 percent to $859.3 million in the first nine months of FY23 from $1,739.5 million in the same time last year.

Additional information showed that the import of completed iron and steel products decreased by 36.6 percent during 9MFY23 to $1,321 million from $2,085 million the previous year.

Steel and iron are regarded as the essential building blocks of any economy. For the current fiscal year, Pakistan’s economic growth is already shattered and could hardly reach 0.5 percent growth.

The 11.59 percent decrease in the Large-Scale Manufacturing sector in February over the same month last year also highlights the substantial reduction in steel consumption.

According to a thorough assessment by the Pakistan Credit Rating Agency (PACRA), per capita consumption of steel in Pakistan has been much lower than the global average over the past five years.

Pakistan’s per capita consumption was lower than that of its neighbor, India, at 76 kg. However, it was 62 kg in CY17, 53 kg in CY18, 42 kg in CY19, 49 kg in CY20, and 59 kg in CY21. The results indicated that there is no national policy in place to change the issue.

About 25% of the world’s steel consumption in CY21 was satisfied by imports and exports. On a gross basis, China continued to be the biggest exporter of steel, while the US was the biggest importer.

In FY22, Pakistan’s annual demand for steel products will be around 13.5 million tons. Nearly 73 percent of the nation’s demand is satisfied locally, with the remaining 15 percent coming from imports.

The Pakistan Steel Re-Rolling Mills Association lists 173 firms in the country’s highly competitive steel industry. Private businesses dominate the steel industry in Pakistan. Since June 2015, the state-owned behemoth Pakistan Steel Mills (PSM), which has a 1.1 million ton capacity, has been dormant.

Cement production in Pakistan decreased by 11.82 percent during 8MFY23, falling to 28.163 million tons from 31.938 million tons in 8MFY22, according to figures made public by the Pakistan Bureau of Statistics.