Pakistan’s decision to impose anti-dumping duty on Chinese steel is feared to raise the cost of automobiles since various local automobile parts manufacturers use imported Chinese steel.
Pakistan Association of Automotive Parts & Accessories Manufacturers (Paapam) Chairman Mashood Ali Khan believes that the auto sector will take a big hit and the impact of the decision is likely to show effect within the next two months. The chairman briefed that local auto part makers use Chinese galvanised sheets to make fuel tanks and other auto parts.
Steel prices came down to just $90 per ton in March 2016 from as high as $1,265 per ton in 2008. However, prices are now rebounding strongly and have crossed $300 per ton in February 2017, increasing pressure on sectors like the automobile that enjoyed low steel prices for the last several years.
A one-third of the country’s local steel demand is met through imports. A massive steel glut in China, due to its own decelerated economic growth, and growing steel demand in Pakistan made steel import viable.
Some auto part makers believe that the duty will not impact some auto part makers who use stainless steel instead of galvanised steel. Others believe the exact impact can only be gauged through time.
However, an anonymous leading steel maker believes that the imposition of duty is likely to create an ideal balance for all industries so that every sector gets a chance to grow in fair competition. Automobile buyers can easily absorb a small hike in local car prices, but the local steel industry has since long been unable to compete against steel smuggling and import duty theft.
