Uneven prices leave steel industry uncompetitive: PSMA

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The Pakistan Steel Manufacturer’s Association (PSMA) has demanded equal competition and level-playing field for steel melters so that investment made in Steel Melting Furnaces running into hundreds of billions of rupees and hundreds of thousands of skilled jobs are secured.
In its letter to Finance Minister Ishaq Dar, the PSMA has pleaded that currently the difference in cost of ship-plates supplied by ship-breaking activity and steel billets supplied by steel melters was 12,000 to Rs 15,000 per ton which is making steel melters absolutely uncompetitive hence leading towards a collapse and closure of formal steel industries in Pakistan.
The letter further said that abnormal increase in electricity rates by Rs 5.4 per unit had also increased the cost of producing steel billets by almost Rs 5,000 per ton. Since ship-breaking industry does not use any electricity, hence the difference in the cost of ship-plates and steel billets has further increased by 5,000 per ton, leading to Rs 15,000 per ton difference. Proposing a solution to the government, the PSMA has demanded the government to mop up the surpluses by imposing federal excise duty on ship-plates and ship items with immediate effect at the rate of at least Rs 10,000 per ton in order to give a level-playing field and equal competition to steel melters.
The PSMA spokesman said this matter could be resolved by a policy statement and notification of a committee to determine duties and taxes so that the difference between ship-plates and steel billets did not exceed Rs 2,000 to Rs 3,000 per ton at all times.
The PSMA further reminded the finance minister that as per the previous agreement between the ship-breakers, steel melters, re-rollers, engineering development board, Pakistan steel, etc, the difference ship-plates and billets should have been Rs 1,200 per ton. As per this formula, custom duty and specific duty per ton was used to balance the different sector of steel industry.
The spokesman said by providing level-playing field to all steel industry stakeholders, the government could reap multiple benefits for its exchequer as well as for economy at large. The existing steel melting units will operate at high levels of capacity utilisation and will also undertake expansion leading to more jobs for the skilled people.
Huge investment will take place in the steel industry as the existing melting units will become profitable and attract investment in the industry. The government revenues in terms of income tax, sales tax, utilities, etc will increase by at least Rs 10 billion.