Pakistan’s steel, construction sectors hit hard by import restrictions

February 03, 2023

Mansoor Sadiq

The restrictions on the import of raw materials and non-issuance of letters of credit (LCs) by commercial banks have badly affected the large-scale manufacturing sectors of Pakistan, WealthPK reports. The worst affected are the steel and construction industries as the prices of steel, iron, cement, tiles and other relevant items have increased manifold. The increase in the prices of different items has also impacted people’s life.

The shortage of raw materials has forced the large-scale manufacturing sectors to close operations as raised production cost with the depreciation of the Pakistanis rupee has multiplied miseries of almost all the industries in the country. Most of the industries in the country rely on imported raw materials and the restrictions have created a shortage of raw materials for the steel industry.

Pakistan Association of Large Steel Producers (PALSP) Secretary General Wajid Bukhari told WealthPK that the steel industry is faced with a challenging situation. “The State Bank of Pakistan (SBP) is not directing commercial banks to open LCs for this sector. It has resulted in the closure of numerous steel businesses in the country,” he added.

The steel industry is vital for the national economy. It also assists many other manufacturing industries and provides employment opportunities to thousands of workers. The production of steel and iron is also a basic requirement for the construction industry of the country.

The shortage of iron and steel has put approximately 7.6 million jobs at stake. The closure of the steel manufacturing units in the country can lead to the closure of several other associated industries. During a media briefing, Wajid Bukhari urged the government to take notice of the issues faced by the steel sector. He said that the import of raw materials for the sector should be allowed with the issuance of LCs on a priority basis.

The real estate and construction sector is no more limited to the sale and purchase of houses and plots rather it has expanded to a large scale with the construction of sky-rise commercial buildings, hotels, roads, bridges, schools, colleges, hospitals and other infrastructures at a massive scale.

The prices of iron and steel products have already increased manifold in the country owing to the shortage of raw materials for the steel sector. Some steel manufacturers have to face enormous losses as they have to pay demurrages for the containers stuck at the ports. Reduction in steel production can further impact the construction industry and other associated sectors including the manufacturers of cement, glass, tuff tiles, PVC, steel and plastic pipes.

Owing to the unavailability of imported scrap for the steel industry, prices of steel bars have reached Rs275,000 per ton. It is feared that the prices can reach Rs350,000 per ton in the coming weeks if restrictions on the import of raw materials for the steel sector are not eased, according to the information gathered by WealthPK.

Credit: Independent News Pakistan-WealthPk