KARACHI: Key steel producers in Pakistan have reported a surge in smuggling and imports at throwaway prices following the government’s announcement of constructing mega projects, including dams and low-cost houses.
In a bid to tackle cheap imports, the National Tariff Commission (NTC) had already imposed anti-dumping duty in June on colour-coated steel, which mostly comes from China, South Africa and Ukraine.
Earlier in February, it also slapped anti-dumping duty on galvanised steel coils/sheets produced by China for a period of five years.
Despite imposing the duties twice, the country remains a favourite destination for the dumping of goods by China, Russia, Iran and some European countries.
“Both Aisha Steel Mills and International Steels have filed anti-dumping cases against Russian manufacturers and proceedings are expected to be initiated shortly,” Aisha Steel said in a report for the first quarter of FY19.
“Sales in the first quarter of the current financial year 2018-19 suffered due to the depressed local market and also on account of heavy imports of cold-rolled coils (CRC) at ‘dumping’ prices from Russia,” it said.
Although the country’s anti-dumping duty evidently led to a decrease in China’s steel exports to Pakistan, the overall volume could not be fully eliminated, stated Topline Securities’ research analyst Shankar Talreja, adding the influx from Russia had also accelerated.
“International Steels’ earnings were trimmed when we visited Karachi’s steel market and observed the influx of imported CRC steel from European, North American and some Asian countries (including China and Russia),” Talreja wrote in a report.
“The availability of imported flat steel products (at somewhat discounted rates) and lower anticipated economic growth prompted us to reduce our utilisation assumption of International Steels to 60-62% for FY20 versus 75% earlier,” he added.
US sanctions on Iran have also affected Pakistan’s market as Iran’s steel, which is meant to be exported to different countries, is coming to Pakistan through the land route, said the head of one of the prominent steel manufacturers, but requested anonymity.
Iranian businessmen barter some steel with cattle, fruit and other commodities from Pakistan but mostly they get paid in cash and that too in dollars, which is increasing pressure on Pakistan’s balance of payments as it currently faces a current account deficit of nearly $19 billion.
The government could stop that by posting officials of law enforcement agencies at border points to make sure traders made deals only through proper banking channels, he said. Pakistan produces five to six million tons of steel per year. However, after Prime Minister Imran Khan’s announcement of constructing five million houses, the demand is expected to increase to 20 million tons.
Published in The Express Tribune, December 6th, 2018.