Steel makers thumb up regulatory duties increase

KARACHI: Steel manufacturers have hailed a government move to impose up to 15 percent duty on the import of various steel products to check steel dumping in the country, but the tax increase provided no relief to the state-run Pakistan Steel Mills (PSM), officials said on Monday.
Last week, the government slapped 15 percent duty on the import of billets, bars, and wire rods and five percent on imported cold rolled coils (CRCs) and galvanised platted sheets.
The move came after the industry complained the dumping of cheap steel products from different countries, including China, hurting the interest of the local manufacturers.
“The government has not raised duty on hot-rolled coils (HRCs), which is the main product of Pakistan Steel,” said Shazim Akhtar, PSM spokesman.
He added that at present the duty on import on HRCs is five percent for consumers and 10 percent for traders. On the contrary, PSM pays 23 percent taxes on HRCs.
“The huge difference between duties on imported HRCs and local HRCs is not in favor of Pakistan Steel...we appeal to the government to provide a level-playing field,” Akhtar said. “Either the government should reduce duty on HRCs manufactured by PSM or increase import duty.”
The PSM’s hot rolled coils are Rs5,000-6,000/tonne expensive than the imported one. Buyers prefer import over local purchases. During the last one year, five billion rupees worth of coils were imported.
Pakistan Steel does not manufacture billets, bars, and wire rods. Therefore, the new duty remains neutral for the PSM, Akhtar said.
An official of International Steel Limited said they were one of the biggest consumers of Pakistan Steel’s hot rolled coils. However, it was importing the coil because PSM was not making the product for the last two years.
Another industry official said some 12 to 13 wire rods manufacturing firms are closed due to cheap imports. “They might restart production after the imposition of duties,” he said.
According to the central bank, the country imported steel products worth $622 million from neighbouring China during July-September 2014. The import surged by 25 percent over the same period a year ago.
Ali Sufyan, an analyst at Standard Capital Securities said the duties will enhance the profit margins of the privately-owned steel firms.

The Pakistan Steel Melters Association welcomed the new levy.
“This decision has come at a time when the industry was in grave danger of being wiped out by imported steel products that come at a cheaper price,” the association said in a statement.
The cost difference between imported and locally-manufactured billets, bars and wire rods increased to an unprecedented level in the range of Rs9,000–14,000/tonne, it said.
Mian Muhammad Adrees, president of Federation of Pakistan Chambers of Commerce and Industry, while criticising the newly imposed duties, said the move will only strengthen the monopoly of steel melters and ship breakers who are already enjoying subsidies.