ISLAMABAD: Taking stock to the remarks made by some senators regarding cartelization in the steel sector, the Pakistan Association of Large Steel Producers (PALSP) has questioned the “underneath motives” of the lawmakers in the industry.
Through a letter, addressed to the Senate Chairman as well as Chairperson of Standing Committee on Industries and Production on Thursday, the Pakistan Association of Large Steel Producers (PALSP), a representative body of the large steel producers, has expressed strong reservations over remarks of some of the members of the standing committee during a recent meeting.
The association, through the letter, has termed the remarks about cartelization as misleading allegations against the steel sector. “Such statements are based on personal interest that could damage the large steel sector which is the backbone of the country’s economy and are passing through the most difficult times’. Also, this could put the jobs of various people at stake, who are directly or indirectly associated with the steel industry,” the association said.
The association has conveyed dismay over the fact that some of the Senators are putting the whole steel industry at stake for their personal / business interest by issuing statements that are not correct. The steel industry consists of over 400 market players with fragmented players and practically there is no chance of cartelization among such a large number of players.
The association laments that in some of the esteemed Committees of the Senate, the statements and decisions are taken according to the personal interests/business interests of some of the Senate members. ‘One of its big examples is the recent decision of “Increase in Tobacco Tax from Rs. 10/kg to Rs. 390/kg on farmers”. The decision raised a big question on the conflict of interest of Senators who are involved in the same business, for whom they have to take decisions in these Committees.
“The steel industry believes that the steel sector is becoming a victim of these kinds of interest groups, where sustained efforts are being made for opening up of barter trade and import of steel from Iran,” it said. “All those products that are produced in Pakistan and could meet the entire local demand, and also meet international standards of quality, must not be allowed to be imported from any country,” PALSP said adding if such measures are taken, this could lead the industry towards closure.
According to the letter, during the recent years, the steel industry has passed through the most difficult times of its history. During the years 2018-19 and 2019-20 leading steel companies declared huge losses and many smaller ones went out of business. During the year 2020-21 and 2021-22 the situation improved little bit but again from April 2022, the steel sector is facing the worst ever crisis and the recent unprecedented floods have added fuel to the fire. As a result, many steel mills have closed down, and many have cut their productions drastically, throughout the country. The worst hit of all is the long segment of the steel sector which is engaged in the production of construction bars.
“If we talk about increase in prices, during the recent years, the prices of all items that are used for construction purposes have increased which includes Cement, Sand, Crush, Tiles, Brick, Concrete, paints as well as steel bars/ rebars. However, no one talks about the increase in the cost of other items especially Cement which is also a major component for construction like rebars,” the association added.
According to the large steel procures whereas, the surge prices of steel are not artificial and is interlinked with various factors like rapid currency devaluation, surge in prices of electricity that is major input, increase in prices of raw materials/scrap in international market, high interest rates, drastically increasing cost of gas, and fuel etc. In a short span of one year (from September 2021 to Sept 2022), the price of scrap increased by 26%, the price of electricity increased by 79%, the price of gas increased by 187%, PKR devalued by 37%, Cargo charges increased 220% and the financial charges raised by 107%.
PALSP being a leading Association representing the steel sector rejects such incorrect and misleading statements that are not based on correct facts & figures. PALSP represents documented & transparent steel sector comprising of most credible players of steel sector contributing billions of rupee in different taxes to the national exchequer.
