PSM output hits six-year high of 60 percent, future unsure

KARACHI: Pakistan Steel Mills (PSM) has increased production to a six-year high of 60 percent, it said on Wednesday, but casting doubts on its 30-year old plants to sustain such high production levels in future.
“The steel mills has been maintaining production at 60 percent (of 1.1 million tone/annum) for the last three-four days,” said Shazim Akhtar, spokesman of the mills. “Also, power production from its thermal plant surged to 50-megawatt after some necessary repair and maintenance work.”
“We are to increase the production to 70 percent in the current month as per our promise with the government under the recently concluded (restructuring) bailout package of Rs18.5 billion,” he added.
However, many, including PSM officials, are unsure that the large and ageing plants may sustain the current production level due to almost no maintenance and repair work done on the integrated steel complex since 2008.
PSM had asked the government to release another Rs3.7 billion for the repair work and the request is still awaiting an approval from the Economic Coordination Committee (ECC) of the Cabinet. Earlier this month, the ECC constituted a committee to assess the repair need at the facility and come up with a solution.
Sources said Prime Minister Nawaz Sharif will nominate a senior official to see if the life of the plants could be extended with the injection of more funds.
More importantly, PSM fails to market its products locally as industries in the downstream sector are importing cheap and quality steel products to meet their needs.
Pakistan steel is mainly producing hot rolled coils (HRCs), but it is unable to market it properly.
Akhtar said the mills demanded of the Federal Board of Revenue to impose 15 percent regulatory duty on HRCs to discourage cheap imports. “We need a level-playing field,” he added. Finished goods (mainly HRCs) worth Rs5 billion and raw material (iron ore and coal) worth Rs3-3.5 billion are available at the facility.
Many other plants at PSM, including cold rolled coils, billets and galvanised sheets, are closed in the absence of sale orders.
A PSM statement said the Mills is unable to market its products due to availability of imported steel from China at a very cheap price and supply of smuggled products.