KARACHI: The fiscal year 2024 witnessed a substantial rise in the import of finished steel products, contributing to heightened prices due to dollar appreciation and a decline in local production.
Data from the State Bank of Pakistan (SBP) reveals a significant increase in the import of finished steel and iron scrap during FY24 compared to the previous fiscal year. From July to May of FY24, imports surged as reported in the SBP’s latest data, highlighting notable changes from FY23.
Imports of iron and steel scrap notably grew by 46.5%, reaching $1.556 billion in the first 11 months of FY24, compared to $1.062 billion in the entirety of FY23. Similarly, imports of finished iron and steel products rose by 22% to $2.062 billion during July-May FY24, up from $1.686 billion in FY23.
These elevated import figures indicate robust demand amidst a decrease in local production capacity.
In its half-yearly report for FY24, the SBP identified key factors influencing the uptick in imported iron and steel finished products.
“The steel sector saw a 1.4% contraction in production during the first half of FY24, compared to a 2.1% decline in the same period last year. Production of flat and long steel decreased by 1.8% and 0.8% respectively,” stated the report.
The sluggish demand from sectors such as automotive, electrical equipment, heavy machinery, and agriculture equipment contributed to reduced utilization of flat steel in H1-FY24, according to the report.
“The decline in long steel production was exacerbated by a noticeable increase in imports of finished steel products alongside modest growth in scrap imports,” the report added.
Furthermore, challenges in transportation following the implementation of axle load limits potentially raised transportation costs, further impacting the sector.
Steel and iron, pivotal materials for construction and industrial activities, significantly influence economic dynamics in any country.
The prices of finished products utilized in construction and other industries experienced a slight decrease, from Rs260,000 to Rs265,000 per tonne.
The construction industry has faced challenges over the past two years, exacerbated by inflation and record-high interest rates. Recently imposed taxes on property sales are expected to further constrain industry growth.
Research reports, alongside the Ministry of Finance, indicate that Large-Scale Manufacturing exhibited minimal growth in FY24, following a 10% contraction in FY23.
