Pakistan Steel Industry has started investing in expanding operations throughout the country in response to a surge in overall demand for steel. This increased demand can be attributed to recent construction and development work under China-Pakistan Economic Corridor and the significant growth in housing projects.
According to the international standards, every five tonnes of cement used in the infrastructure projects requires one ton of steel. In addition, ten steel mills are currently listed in Pakistan Stock Exchange (PSX), and most of them made their way into the capital market between 2011 and 2017.
Steel firms are expected to get supply contract for the upcoming infrastructural projects under CPEC umbrella – such as Orange Line, Karachi-Lahore Motorway and Neelum-Jehlum hydropower project. Steel sector watchers believe that the demand of steel in the country is expected to surge significantly in the upcoming three years.
“Considering that currently around 45pc of the country’s steel requirement is met through imports, local steel players have significant room for organic growth”, says a sector watcher.
According to the figures released by the World Steel Association (WSA), use of steel in Pakistan in 2015 was 7.1 million tonnes, which equals to 37.5 kg. Moving ahead, steel requirement in Pakistan is expected to swell over 12 million tonnes, which would take the country’s per capita requirement to 62 kg by 2019.
The steel that is produced to cater this demand is currently being manufactured by Mughal Steel Limited (MUGHAL), Amreli Steel Limited (ASTL) and soon to be commenced at Dost Steels Limited (DSL).
Interestingly, besides constant increase in the demand of steel in the local market, steel companies are benefitting through positive regulatory changes – such as imposition of anti-dumping duty and increase in regulatory duty.
Analysts at Intermarket Securities said in their June 7 report that price of steel in international markets have been plummeting sharply since March 2017, because of increasing levels of iron ore inventories in China.