KARACHI: In the financial year 2024 (FY24), the import of finished steel products increased significantly. This rise in imports led to higher prices due to the rising value of the dollar and a decrease in local production.
Data from the State Bank of Pakistan (SBP) revealed that both finished steel and iron scrap imports went up in FY24. The central bank provides data for July to May FY24, compared to the same period in the previous fiscal year.
Iron and steel scrap imports increased by 46.5%, reaching $1.556 billion in the first 11 months (July-May) of FY24, compared to $1.062 billion in the entire FY23. Similarly, finished iron and steel product imports rose by 22%, amounting to $2.062 billion during July-May FY24, compared to $1.686 billion in FY23.
These higher imports indicate strong demand but low local production.
In its half-yearly report for FY24, the SBP explained the reasons and effects of the increased imports of finished iron and steel products. According to the report, steel production decreased by 1.4% in the first half of FY24, compared to a 2.1% decrease in the same period last year. Production of flat and long steel fell by 1.8% and 0.8%, respectively, during this period.
The report also noted that weak demand from industries like automobiles, electrical equipment, heavy machinery, and sugarcane machines led to reduced use of flat steel in the first half of FY24. The decline in long steel production was due to increased imports of finished steel products and limited growth in scrap imports.
The report highlighted that transportation challenges, following the implementation of axle load limits, might have raised transportation costs, negatively impacting the sector.
Steel and iron are crucial for construction and industrial sectors and are key to the economic health of any country. Prices for finished products used in construction and other industries slightly dropped to Rs260,000 per tonne from Rs265,000.
The construction industry has struggled over the past two years due to various reasons, with inflation and record-high interest rates causing the most damage. Recently, the government imposed taxes on property sales and purchases, further restricting the industry’s growth.
Reports from research and the Ministry of Finance show that Large-Scale Manufacturing has yet to see significant growth. It remained flat in FY24 and contracted by 10% in FY23.
