Pakistan Steel Mills faces plunging sales

[Hyde]

Pakistan Steel Mills faces plunging sales ​

By Aamir Shafaat Khan
Thursday, 03 Jun, 2010

A worker at a steel mill on the outskirts of Islamabad. - Photo by AP.​

KARACHI: The sales of Pakistan Steel plunged to Rs21 billion during the first 11 months (July-May) of the outgoing fiscal year from Rs32 billion in the whole 2008-09.

The steel maker witnessed a drastic drop in May sales to Rs707.4 million from Rs1.422 billion in April and Rs2.548 billion in March 2010.

Besides, the PS had to rationalise its product prices upward by an average 16 per cent for its main products to compensate rising cost of production mainly due to high raw material input cost and rupee devaluation during calendar 2009. And in first five months of 2010, the mill had increased prices four to five times.

In reply to Dawn queries about sales and prices, an executive in the Pakistan Steel said the main reason for falling sales was the misuse of concessionary SRO by the steel pipe manufacturers.

He said that manufactures were importing material under the concessionary SRO at five per cent and zero per cent customs duty instead of normal 10 per cent customs duty. Besides, China was giving export rebate at nine per cent on hot rolled coils and 13 per cent on cold rolled and hot dip galvanised products.

In addition, a customs duty discount of about three per cent is also available under Preferential Trade Agreements (PTA) on steel imports from China. All these concessionary rebates including reduced government duties and taxes contribute to very low landed cost as compared to Pakistan Steel prices, he explained.

He said imports of cold rolled products were also on the rise as about 8,200 tons of these products were imported in April 2010, while in May the imports had been doubled. Same was the case with galvanised products as 4,700 tons were imported in April and over 5,500 tons in May.

The share of Pakistan Steel in domestic market of flat products at 70-80 per cent capacity utilisation was 49 per cent, 44 per cent, and 15 per cent for HR, CR and GP respectively of late, but the market share has been completely taken over by the import substitution, the executive said.

Pakistan Steel was requiring 1.5 to 1.7 million tons per annum of iron ore at 80-90 per cent capacity utilisation but now the situation has changed for the last six to eight months as only 40,000 tons per month have been arriving mainly from Iran, he said.

He said the mill had written several letters to the government’s concerned ministries, FBR and National Tariff Commission (NTC) for removing some anomalies in the taxation system and to provide a level-playing field.

The mill has sought withdrawal of concessionary SRO No. 565 and 450, which are being grossly misused by the local industries. There is a need to bring sales tax of billet at par with other identical products produced locally or imported, he asserted.

He said the government had been asked to provide exemptions on sales tax at import stage on raw materials of Pakistan Steel i.e. Iron Ore and Coking Coal in line with exemption extended to steel scrap and ship plate. “There is a need for imposing anti-dumping duty on Hot Rolled products. The case is pending for decision with National Tariff Commission for the last nine months,” he added.

 

[xenia]

PSM is in loss bcoz of frauds n looters...just waiting for the time when PSM ll get rid of them..if i live looong enough to see!!

 

[flameboard]

This has corruption written all over it. The Chief Justice has said the sale is null and void therefore it rightfully belongs to the Pakistani people. A dictator sold this but now we need it back. Has the Pakistani government taken this back or is it still in the hand of a private company.