Pakistan’s steel and scrap iron imports have decreased by more than 50% in the current fiscal year, according to data released by the State Bank of Pakistan (SBP) on Tuesday.
During the first nine months of FY23, the import of scrap iron and steel fell by 50.6% to $859.3 million, compared to $1,739.5 million during the same period last year. Finished iron and steel product imports also fell by 36.6% to $1,321 million from $2,085 million last year.
A growing economy is thought to require a lot of steel, but Pakistan’s economic growth is only expected to be 0.5% this fiscal year. The sharp decline in steel consumption is reflected in the 11.59% year-over-year decline in the Large-Scale Manufacturing sector in February.
Pakistan’s per capita consumption of steel, which is significantly lower than the global average of 233 kg with South Korea having the highest per capita consumption, has been declining for the past five years.
Low consumption, which has affected every industrial sector, including construction, where prices have increased by more than 100% in a year, is indicated by the low imports of steel. Pakistan consumes less steel per person than its neighbour, India, who uses 76 kg.
However, per capita consumption in Pakistan has fallen from 62 kg in CY17 to 53 kg in CY18, 42 kg in CY19, 49 kg in CY20, and 59 kg in CY21.
Even though Pakistan’s annual demand for steel products is approximately 13.5 million tonnes in FY22, with nearly 73% of that demand being satisfied by domestic production and the remaining 20% being met by imports, Pakistan lacks a policy to improve this situation.
Although Pakistan produces about a million tonnes of iron ore annually, it still imports finished steel to meet industry demand. Iron scrap is the main raw material used in the steel industry.
The Pakistan Steel Re-Rolling Mills Association has 173 players registered, the majority of which are private corporations that drive the nation’s steel industry. Since June 2015, Pakistan Steel Mills (PSM), a state-owned behemoth with a 1.1 million-tonne capacity, has been dormant.
According to data from the Pakistan Bureau of Statistics, Pakistan’s cement production decreased 11.82% during 8MFY23, from 31.938 million tonnes in 8MFY22 to 28.163 million tonnes.
It is crucial for the government to develop policies to increase production and consumption, creating more opportunities for growth and development, as the decline in steel and cement production in Pakistan has a significant impact on the economy of the nation.