Steel consumption to fall by 20-25%: importers

[Naveed Yaseen]

By Moonis Ahmed
KARACHI: Despite the significant decrease in international prices of iron and steel the import of the raw material is expected to remain slow due to the continuous devaluation of the rupee against the dollar, importers told Daily Times.

Importers said that iron and steel import may decline by 20-25 percent this year, as the consumption is continuously reducing.

International prices of iron and steel that had stayed at very high levels for eight to nine months, witnessed a sharp decline of about 25-30 percent, in the recent past. The prices of galvanised steel, hot rolled and cold rolled have come down to the level of $800, $650 and $750 per tonne respectively as compared to the previous level of $1,100, $650 and $ 1,000 per tonne.

There has been a construction slump in Pakistan during the previous months due to economic slowdown, devaluation of rupee and dwindling bourses that have played a significant role in bringing down constructions. These factors have significantly reduced the consumption of iron and steel. Only the government-sponsored projects are running whereas private sector faces complete halt these days that also caused a decline in its consumption.

The worsening situation of the economy and liquidity crunch in the country also put negative effect on the import, they added.

The steel consumption hovers in the range of 4.5 to 5 million tonnes annually. For instance, in the last year, steel consumption stood at about 5 million tonnes, in which Pakistan Steel Mills contributed about 25 percent by production of 1 to 1.1 million tonnes, about 1.5 tonnes was locally imported and the rest was imported to meet the local demand.

The importers also cited the enhanced capacity production of Pakistan Steel Mills as the reason for the falling imports of iron and steel products because the locally produced iron and steel products, especially the hot roll material, are available at cheaper rates as compared to the imported ones, which are still piling up.

However, it is feared that the demand for iron and steel as well as other building material would decline this year, as no big project has been launched in the country for a long time.

Referring to the slow down in industrial expansion especially in the days to come, importers said that at the moment it did not dent the consumption of iron and steel by the industry. However, if the situation persisted, it would further result in cutting down the iron and steel import during the current financial year.

http://www.dailytimes.com.pk/default.asp...2008_pg5_6