ISLAMABAD, Feb 26: The Pakistan Steel Re-rolling Mills Association has attributed the 15 per cent surge in prices of steel material to the shortage of raw material, saying that import of 1.1 million tons of raw material may help stabilise the steel prices in the market.

The association says the total availability of raw material is currently estimated at 3.7 million tons with a projected demand of 4.5 million tons leaving a deficit of 800,000 tons. The import will help in lowering of prices of quality steel material, and its availability for national projects in sufficient quantities.

According to the association the total material re-rolled from mild steel ingots and from other re-rollable products in one year was 3.633m tons. The amount of sale tax paid in 2004-05 was Rs613.32m against Rs640.49 million sales tax paid in 2006-07.

Meanwhile, a meeting of the committee formed by EDB was held in Islamabad on Monday to seek views of stakeholders on high steel prices and shortage in the local market.

The steel industry failed to recommend any immediate measure to reduce prices of their products, especially long iron bars. They were, however, unanimous in recommending zero sale tax on inputs as a medium term measure.

The meeting decided that all trade organisations will submit within two days their recommendations with commitments that they will improve their efficiency and competitiveness within 3 to 4 years in case of zero-rating of sale tax.

There was sharp division among the stakeholders on the recommendation that import duty on billets should be reduced. The meeting was informed that the domestic prices were linked with international market and there was no way to de-link them as all the inputs of steel are imported into Pakistan. Therefore, increase in prices at the global level will be reflected in the domestic market as Pakistan Steel was meeting only eight per cent demand of billets, which are used to manufacture long products.

A press release issued by the EDB stated that the meeting took serious note of non-availability of data with the trade organisations which were advised to improve their professionalism in the light of global demands.

The representatives of ship breakers raised the question of smuggling of substandard raw material through the border with Iran. Their plea was that this should be regularised by imposing duties otherwise ship-breaking industry would not be able to stand on its feet.