Challenges of integration of

Pakistan with the Global

Steel industry

Present Situation
Small and Medium Units
No. of Scrap Melters:
No. of Re-rolling Mills:
Ship Breakers:
Foundries:

80
2.5 mt
400
4.2 mt
10 negligible production
450

Large Units:
Pakistan Steel Mills Flat Products
0.700 mt
Long products 0.275 mt
Steel Pipe Mills
Over 60

Ground Realities of Long Products

Steel
Sector
Fragmented
sector and low technology level

Highly inefficient power use by domestic industry

Steel produced at more than 750KWH/ton against global benchmark of 350

KWH/ton
Hot rolling conversion at 110-130KWH/ton against global benchmark of
95KWH/ton

Lack of quality control practices in the field

Re-rolling: Average Production Capacity: 0.5-10 tons/hr

Melters: Average Production Capacity: 2-12 tons/hr

PSQCA Quality certification standards to be adopted by regulators, planners,

users on one hand and producers and distributors on the other hand

Lack of availability of competitive priced semi finished steel billet

to the hot rolling industry

PSM catering to only 6.5% of long products steel billet/ingot demand of

country without any scope of improvement in production in the medium term
Need to make import of steel billets price competitive in medium term by
fiscal tax corrections

GOP to take responsibility to

constructive policy making in Steel
Sector
No Steel sector Government policy ever evolved. Failure of
the GOP to give direction to the industry

Resulting in the country using 9688MW of power sector capacity

instead of 4522MW as per global benchmark for steel making
Steel domestic production deficit is increasing with increasing per
capita GDP
Need for GOP to remove import duties and sales tax ITP value on
steel billet to reduce rebar prices below PKR.60,000 per ton
Need for GOP to evolve a medium term steel policy in the
backdrop of non availability of any steel making raw materials
within the country
Need for GOP to evolve a long term mineral policy where iron ore
beneficiation facilities and coal mining is established
Need for GOP to make long term policies which facilitate the
industry to reduce dependence from 100% imports at present

Production /Consumption

Facts

Pakistan Population growth 4%

Per capita steel consumption 2005
Pakistan 36kg India 39kg China 214kg
Per capita GDP 2007
Pakistan $.652 India $.558 China $.1228
Pakistan steel consumption lags with the accepted GDP Steel ratio being
observed in other developing countries
Steel market consists of Flat products 33% and Long Products 67%
Projected steel consumption growth for the next five years to be in higher
double digits supported by over 7% GDP growth
Cement consumption growth already in double digit supporting growth of
long products deformed bars use

Strategy Forward

Enforce steel quality standards (ASTM, BS, DIN) for production of long
products high strength seismic friendly reinforcing bars.
Draw a three year phase out plan to convert all substandard mills
production of low strength deformed rebars and cold twisted Tor debars
into high strength seismic friendly deformed debars conforming to all
international building codes.
Build a government industry interface committee for the flat products,
long products and foundry sectors separately to plan and implement five
year plans.
Addition of 3mt steel making capacity by 2010.
Add 1mt of new high strength deformed bars capacity by 2010.
Insulate the hot rolling sectors with a import tariff wall differential of a
minimum of 10% on their finished products.

Incentives Needed for Foreign

Investment In Steel Sector

Promote and facilitate local and foreign investment through:

Availability of venture finance and project finance.

Guaranteed availability of Infrastructure of Power, Gas and
Land with adjoining Port Jetty.
Allotment of plots at concessional rates in industrial parks for
establishing new steel melt shops in excess of 1 MT/year
capacity
Allotment of plots at concessional rates in industrial parks for
establishing new bar mills in excess of 300,000 tons capacity
Introduction of fiscal tax incentives for conversion and
expansion projects of existing substandard steel bar mills
Corporate tax holiday for first five years and low Tax rate for
the next five years for all new projects
Concessions given may be protected through Act of parliament

High Level of Wastages

Melters:

Usage of electricity:
International benchmark:
Electricity Wastage:
Production:
Wastage during melting:

800 units / ton

350-380 units / ton
1,700,000 MW per aanum
3.6 Million Tons
7-8%

Re-rollers:

Usage of electricity:
International benchmark:
Electricity Wastage:
Production:
`
Wastage during conversion from
billets to Bars:
International standard:

135 units / ton

95-105 units / ton
120,000 MW per annum
4 Million Tons
8%
4%

THANK YOU