KARACHI, May 30: Around 50 steel re-rolling mills all over the country have pulled down their shutters owing to shortage of raw material from Pakistan Steel and shipbreaking industry.

Many small and medium sized mills are struggling to survive but it is more likely that they may pack up their business in case the shortage of raw material (M.S. Billets) persists.

“The industry was comprised 350 mills out of which some 50 small and medium sized units had closed due to non-availability of raw material in the markets,” Chairman Pakistan Steel Re-rolling Mills Association (PSRMA), Shahnawaz Ishtiaq told Dawn on Friday. The re-rolling mills cater to the needs of engineering goods industry, mega development projects, general construction and housing sectors.

He said Pakistan Steel has raised the prices of billets by over Rs2,500 during January-May this year. The PS has a limited production capacity of billets and it can hardly meet 20 per cent of total requirement if it runs in full capacity.

Besides, arrival of ships with low tonnage at the Gaddani shipbreaking industry for scrapping purpose has caused a major shake-up in our industry, he said. According to Pakistan Ship Breakers Association (PSBA), 39 ships arrived in July-May 2002-2003 with a total tonnage of 0.215 million tons as compared to 36 ships with a total tonnage of 0.774 million tons, showing a fall of 72 per cent in tonnage. Gaddani has been a major source for re-rolling mills for procurement of raw materials. Due to high prices of demolition ships, the shipbreaking industry has become unfeasible and at present no supplies are available from this source, Shahnawaz said.

He said the association had informed the Pakistan Steel two days back that supplies of M.S. Billets from the PS were not being made available directly to the re-rolling industry and instead supplies were being made to dealers who are middlemen.

He said that the policy of Pakistan Steel of giving preference to dealers was tolerable when billets were available in abundance from shipbreaking industry. “The situation is not same any more. Since Gaddani has gone dry, Pakistan Steel is the only source of obtaining raw material for re-rolling industry”, he added.

He said the government could help the industry by eliminating the 20 per cent import duty on billets in order to revitalize the re-rolling industry.

Meanwhile, an official in Pakistan Steel said that re-rolling industry was demanding zero rated import duty on billets so that it could offset the impact of rising prices of billets in world markets. He said the demand of Pakistan Steel products was rising but the PS was trying to meet the huge demand under limited capacity of production.