KARACHI: The import of finished steel products significantly increased in FY24, leading to inflated prices due to dollar appreciation and reducing local production.

The State Bank of Pakistan’s (SBP) data showed that the import of finished steel and iron scrap increased in FY24. The central bank provides July-May FY24 data with the comparative figure of the preceding fiscal year.

The import of iron and steel scrap surged 46.5 per cent to $1.556bn during the first 11 months (July-May) FY24 compared to $1.062bn in the entire FY23.

Similarly, the import of finished iron and steel products increased by 22pc to $2.062bn during July-May FY24, compared to $1.686 bn in FY23.

The higher imports suggest strong demand and low local production.

In its first half-yearly report of FY24, the SBP also identified the cause and effects of the increase in the import of iron and steel finished products.

“Steel production shrank 1.4pc in 1HFY24 compared to a contraction of 2.1pc in the corresponding period last year. Production of flat and long steel declined by 1.8 and 0.8pc, respectively, during 1HFY24,” said the report.

The sluggish demand from complementary industries including automobile, electrical equipment, heavy machinery and equipment, sewing and sugarcane machines led to subdued utilisation of flat steel during H1-FY24, said the report.

“The decline in production of the long steel industry was due to noticeable expansion in imports of finished steel products besides muted growth in import of scrap, said the report.

The report also said that transportation difficulties after the implementation of axle load limits may have negatively impacted the sector by raising the cost of transportation.

Steel and iron, being pivotal materials in the construction and industrial sectors, play a significant role in shaping the economic landscape of any country.

The prices of finished products being used for construction and other industries have slightly slipped to Rs260,000 per tonne from Rs265,000.

The construction industry has been in bad shape for the last two years for many reasons, but the inflation and record high interest rate caused it the biggest damage. Now, the government has taxed the sale and purchase of properties, which would further limit the scope of the industry’s growth.

Research reports and the ministry finance report show that Large-Scale Manufacturing has yet to show significant growth. It was flat in FY24 and contracted by 10pc in FY23.

Published in Dawn, July 17th, 2024