This stoppage has led to reduced supplies of raw material like iron billets and ingots to the steel re-rolling industry.
Gas supply to around 140 steel furnace units, which are operating across the country mostly in Punjab, has been suspended for 16 days from January 3 to 18 after an acute energy crisis hit the country in the wake of violence after the death of former prime minister Benazir Bhutto.
Similarly, electricity load-shedding has halted regular production at 400 steel re-rolling factories, triggering an increase in prices of steel products.
During the last few days, the prices of T-iron and iron belts increased by Rs3,000 to Rs5,000 per metric ton, reaching Rs48,000 to Rs50,000 compared to previous Rs43,000 to Rs45,000.
The market is anticipating further increase in prices of iron products in a couple of days as the raw material available to a few re-rolling mills will be exhausted, causing their shortage.
A study conducted by The News revealed that after the death of Benazir Bhutto the steel industry, like other industries, was also badly affected. First, the supply of furnace oil was suspended and then gas and electricity load-shedding added to the problems of the industry.
The situation at composite plants, steel furnaces and steel re-rolling units combined is worse than on individual basis as gas supply to the composite plants has been completely suspended while those re-rolling units, which are operating separately, are getting gas supply. However, electricity load-shedding has stopped production at the re-rolling units.
In the re-rolling industry, a furnace takes a minimum of six hours to melt billets and ingots, but breakdown of power supply restricts the furnace from reaching the melting point. Once the furnace gets stopped due to power suspension, it takes the same time again to restart and reach the melting temperature which multiplies the production cost. On the other hand, the raw material once put into the furnace could not be withdrawn till the melting process is completed.
Repeated melting of a raw material reduces the quality of finished goods and increases the sales tax on the producers as the tax is imposed depending on how many times a furnace is run ignoring how many times a single raw material is melted due to any circumstances. This practice not only pushes up the cost of the steel re-rolling and melting industry, but also enhances the ratio of wastage which is ultimately passed on to the consumers.
On an average, 150 daily-wagers work at a furnace unit or steel re-rolling factory and in total over 80,000 workers are employed on which around four lakh people depend. The stoppage of production has rendered the workers unemployed, causing resentment in the society.
At present, around 40 industries are linked with the furnaces and steel re-rolling industry including the construction industry and auto parts’ makers which provide employment to a large number of people. In this scenario, the allied industries will also suffer, leading to further unemployment in the country.