PSM faces raw material deficit

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KARACHI – Pakistan Steel Mills (PSM) is facing a dire shortage of iron ore and it seems likely that it will lower output further from its current level of 30 percent in the coming weeks. It has been learnt that the mills holds roughly 5,000 metric tonnes of iron ore, which is insufficient in operating beyond the 30 percent level, with about 1,000-2,000 metric tonnes of local iron ore being consumed on a daily basis.
According to sources, last month the mills used 30,000 metric tonnes of local iron ore. To maintain a strategy of total reliance on domestic raw material; the PSM administration has planned to install a desulphurisation plant in the near future. On the other hand, due to falling steel prices in the international market, the mills is witnessing an increase in its sales. Therefore there exists the very real possibility that PSM will run out of iron ore.
It has also been revealed that the mills earned approximately Rs 2.5 billion in sales under a scheme; while international market shows a decline in steel prices. Sources indicated that the administration of the mills has changed its strategy and restricts inventory to a bare minimum to reduce with the organisation facing losses in the past few years due to a price fluctuation in stocks which had been stored.
The output was relatively costly for the mills due to the price hike and the mills had to consume expensive inventory it had stocked up on, sources said. They added that since then, PSM has ceased buying large inventories much beyond the immediate needs of the organisation.