Steel sector rejects ABAD chairman’s statement

ISLAMABAD: Country’s steel sector rejected the statement given by Association of Builders and Developers (ABAD) chairman and the claim of accusing the sector of cartelisation or conspiring against PM’s Naya Pakistan Housing Scheme.

Pakistan Association of Large Steel Producers (PALSP) wants to make it clear that the most recent increase in the prices of steel bars is the result of drastic increase in steel melting scrap prices internationally. This phenomenon is not confined to Pakistan as it is happening the world over and is due to shortage of scrap in the international market caused mainly by COVID-19 related supply chain disruptions but also due to heavy snowfall in many countries, which reduces the collection of scrap. As a result, the prices of raw material internationally have shot up from $305 in August 2020 to current bookings of $470. This price may further rise in the international market.

“Statements made by ABAD are completely illogical. How can an industry where there are over 300 manufacturers of steel bars collude to fix prices? Due to intense competition, steel prices are normalised very efficiently and this is evident in industry margins, which are as low as 3% currently. The entire aim of cartelisation is to have abnormally high profit margins, which is clearly not the case in the steel industry,” mentioned an industry expert.

Over the past two years, steel manufacturers have absorbed massive cost increases on account of rupee depreciation, energy costs and taxation measures that have brought industry profit margins to bare minimum and many times in the negative territory in order to provide cost-effective material to government and housing projects. However, the latest increases in raw material are too large to absorb and will have to be passed on to the consumers.

“We will file defamation cases in courts against members of ABAD if such false and baseless claims continue. In fact, we believe construction projects of national importance will only be achieved if all stakeholders support each other rather than exhibit such childish behaviour as some members of ABAD are currently doing,” a senior official of PALSP said. “We believe the current hike in raw material prices is temporary and may only last for the next three to four quarters. We have also approached various ministries to apprise them of such a temporary phenomenon and how we can work together to mitigate the impact”.

Pakistan Association of Large Steel Producers (PALSP) have approached all the ministries to take cognizance of this phenomenon and have suggested temporary measures to reduce import tariffs on raw materials and sales tax in order to mitigate this temporary phenomenon.