Gulf Today reported that strong economic growth
over the last decade has directly resulted in an increase in demand for steel
by various sectors such as the manufacturing and construction industries, both
of which have exhibited growth over the last 5 years.
However, Pakistan is still amongst the lowest per capita consumers of steel
at 37 kilogram in comparison to the regional average of 207.8 kilogram and
world average of 181.5 kilogram, presenting an opportunity for the steel
sector to grow manifold and for investors to tap into a largely unexplored
market with significant upside potential.
The organised sector comprises corporate which
cumulatively have an annual production capacity of up to 1.3 million tonnes.
The actual capacity utilization is limited to 17.4% due to the fact that
approximately 60% of the total available capacity is yet to achieve commercial
operations.
Pakistan Steel Mills which currently has a
production capacity of 1.1 million tonnes is running inefficiently at a
capacity utilization of 43%. This sector is fragmented with an estimated 100
units operating in the country. Total installed capacity of smelters is
estimated at approximately 2.7 million tonnes per annum.
This segment re melts scrap to produce cast billets
and thin ingots. Major raw materials include both imported as well as locally
generated scrap recovered from ship demolition, obsolete machinery, automobiles
etc. It is estimated that the unorganized sector operates at 74% capacity thus
contributing approximately 2 million tonnes per annum to the steel production.
Analysis of import composition reveals that the 2
most dominant imports are sheets and iron scrap which cumulatively account for
80% of the total value imported and individually account for 42% and 38%
respectively. Imports are mainly procured from producers in the USA , UK
and China
which cumulatively account for approximately a quarter of the total imports.
Source: Steel Guru. (Sourced from www.gulftoday.ae).
20 February 2012
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