Pakistan is the World's Fastest Growing Steel Producer

Steel production in Pakistan jumped 39.3% to 5 million tons last year, according to World Steel Association. Earlier, Pakistan steel industry ramped up its output from 2.9 million tons in 2015 to 3.6 million tons in 2016.

While Pakistan's steel production growth is the world's fastest,  its relatively small steel production volume of 5 million tons ranks it 28th in the world. Other nations seeing strong growth in steel production are Iran (up 21.4%), Vietnam ( 31.9%) and Egypt (35%).   Iran ranks 13th with 21.7 million tons; Vietnam ranks 19th with 10.3 million tons; Egypt ranks 23rd with 6.8 million tons produced in 2017.

Some of the key names ramping up production capacity in Pakistan are Aisha Steel Mill (ASM),  Amreli Steels and Agha Steel Industries.

ASM, an Arif Habib Group company, is planning to expand capacity to a total of 700,000 tons a year from its current capacity of 220,000 tons.

Amreli Steels Limited, country’s leading steelmaker has announced plans to increase its annual production capacity of reinforcement bars to 750,000 tons a year within the next two years.

World Steel Production. Source: WorldSteel Association

The biggest drivers of soaring steel demand in Pakistan are rapidly growing large scale manufacturing and construction sectors.

Car sales shot up  23% while motorcycle sales soared by 20% in January 2018, according to industry data.

The cement sales, a good proxy for construction sector, rose 14.3% in the first 7 months of fiscal 2017-18.

World Steel Trade. Source: WorldSteel Association

Pakistan is the third fastest growing economy among the top 25 economies in terms of purchasing power parity.  Pakistan's economic growth is continuing to accelerate amid rising rising investments led by China-Pakistan Economic Corridor related infrastructure and energy related projects.  The IMF sees Pakistan economy growing at 5.6% while the World Bank forecasts it to grow by 5.5% in current fiscal year 2017-18 ending in June 2018, a full percentage point faster than the 4.5% average GDP growth for Emerging and Developing Economies (EMDEs) that include Argentina, Brazil, China, India, Nigeria and Russia among others. However, Pakistan economic growth continues to lag growth forecast for regional economies of India and Bangladesh. The report also calls attention to the expanding current account gap as a matter of concern that must be taken seriously by the government to avoid yet another return to the International Monetary Fund (IMF).

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Comment by Riaz Haq on July 5, 2019 at 9:33am

A review of 9MFY19 performance of Pakistan’s cement industry

https://www.cemnet.com/News/story/166258/a-review-of-9mfy19-perform...

IGI Securities has reviewed the performance of Pakistan's cement industry for the first nine months of FY18-19 (July 2018-March 2019). Provisional numbers show that cement dispatches for March 2019 declined by 12 per cent YoY to 4.11Mt. On a cumulative basis, this brings 9MFY18-19 total dispatches to 34.19Mt as against 34.76Mt, recorded in the same period last year, marking a fall of two per cent YoY.

While local sales from southern Pakistan have grown by over 15 per cent during the nine-month period as a result of excess capacity and deeper penetration, those from the north of the country have dropped by 12 per cent YoY largely, due to curtailed government spending on development projects and reduced private construction activities amid weak macroeconomic indicators.

While export sales have been on the rising trend ever since 4QFY18, amid rising capacities in the south, clinker exports account for a major share. Contrary to cement exports which achieve better prices of US$50-55/t in the international market, clinker is sold at relatively-lower and less-profitable prices of US$32-35/t.

Cement exports from the north, particularly in the last two months, have been on the decline, mainly due to the deteriorating trade terms with India amid rising political tensions between the two countries.

Cement prices
As of 28 March 2019, average cement prices in the northern region stood at PKR596/bag (US$4.23), down by one per cent MoM, according to weekly data published by the Pakistan Bureau of Statistics (PBS). Average cement sale prices in the south have marginally edged up by 0.6 per cent to PKR613/bag.

Outlook
Pakistan’s cement sector in FY18-19 is ending with a decline with little improvement expected in FY2019-20. Following the seven per cent YoY contraction of local dispatches in 9MFY18-19 and with the holy month of Ramadan around the corner during which construction activities are substantially reduced, analysts expect FY18-19 to end with a below-par performance when compared with the previous year.

Comment by Riaz Haq on August 12, 2020 at 11:21am

Pakistan sources 65-70% of its total scrap requirement primarily from the UK and Europe. The rest comes from the Middle East, North America, South America, Australia etc.


https://www.steel-360.com/personality/pak-steel-industry-likely-to-...


Scrap is also produced domestically, but which fulfils only around 20% of our total requirement. Thus, a significant volume of the material has to be sourced from overseas.

Q. Scrap demand in your country is at around 50% of its optimal capacity… So, when do you think there can be an upturn in the demand scenario?
A. Munif-ur-Rehman: The demand scenario has improved much at present due to upcoming infrastructure projects. Ferrous scrap demand is actually fuelled by the demand for steel billets and rebars. Demand of steel is gradually increasing due to infrastructure development projects like coal-based power plants, dams, motorways, flyovers, railways, bridges and housing schemes etc. The China Pakistan Economic Corridor (CPEC) has had a positive influence on the steel industry since its inception. Moreover, the Government of Pakistan has launched a big housing project which will add to the demand for steel. The future of Pakistan’s steel industry thus looks better.
-----------------

All our steel comes from the EAF  (Electric Arc Furnace) and IF (Induction Furnace) routes. Pakistan has around 350 steel smelters and among them only 6-7 are EAFs, while the rest are all IF-based. EAF is a technologically advanced process compared to IF but it requires more maintenance which adds to the cost. EAFs are usually feasible for larger-scale melting arrangements that make it more commercially viable. For instance, one of the leading mills owns a 45-tonne furnace.

There are multiple challenges this industry faces.


Usually, challenges are in the form of expensive power tariffs which raise the cost of production significantly. Besides that, there is the issue of competing with low- grade billets and ingots in the local market at unregulated prices which makes it difficult to sell quality products in the market at the right prices. There should be long-term sustainable policies by the government which should not be affected by any external influences.


As for the opportunities, we see these in the initiation of big infrastructure projects, including CPEC. There is also news that China is going to set up a steel mill in the northern area of Pakistan through a joint venture.
Besides, the government has announced zero-rated custom duty in order to facilitate imports of scrap in the Budget for 2019-20. This may also lead to an increase in the imports of melting scrap. Moreover, a new standardised taxation structure is in place which will create a level playing field for the steel manufacturers, irrespective of their size.

Pakistan is ranked 28th with an estimated volume of 5 million tonnes (MnT) of crude steel production per year. The official figure of 2019 is yet to come in. However, the estimated volume is around 6 MnT at present. Overall, finished steel demand is around 8 MnT per annum. Prices of finished steel depend on the prices of raw materials. For instance, rebars have different strengths but when prices of rebars go up, finished steel prices also rise in tandem.


Despite the drawbacks, there is expansion and new plants (IFs) are coming up. Players feel there will be a demand surge for finished steel. If all goes
well, the potential domestic scrap demand of 400,000 tonnes per month may increase by 20-25% or even more – because newer plants are coming up and they are going for economies of scale. These players are setting up bigger plants so that the cost per tonne goes down. The present cost per tonne differs across IFs and EAFs and across regions too.

Hafiz-ur Rahman Khatib: There are thus opportunities for our company… we are hopeful that in one or one-and-a-half years, the Pakistan economy will revive and the steel industry, which is the backbone of an economy, will too look up, InshaAllah

Comment by Riaz Haq on August 12, 2020 at 11:29am

According to SBP (2017), steel industry is leading the large-scale manufacturing (LSM) sector with growth rate of 16.58 percent from Jul-Mar 2016-17. On the one hand, the spectacular growth of industry is being highly appreciated while the malicious output quality is being considered as a major point of concern, on the other. Presently, the steel industry of Pakistan is using the induction furnace technology to produce the steel and this technology has not only become highly obsolete but is also considered as environmentally devastating.

https://epaper.brecorder.com/2018/05/08/6-page/715714-news.html

Further, the quality of steel produced through induction furnace route does not meet the quality standard. Due to this reason China, the largest steel producer, has completely banned the use of Induction furnace for steel production and has shifted its crude steel production either toward blast furnace (BF) technology or electric-arc furnace (EAF). Despite the fact that blast furnace is the dominating production route, since 2007, global steel production, through the electric-arc furnace(EAF) process, has seen a sharp upward trend. According to some observers, the efficiency, feedstock flexibility and environmental advantages of EAFs make investing in them more attractive than other options, especially concerning existing and upcoming Carbon Emission Regulations and growing steel scrap reservoirs.

Furthermore, Electric-arc furnaces are pollution free and have outstanding metallurgical control. This greatly reduces the demand of energy required to make steel when compared to primary steelmaking from blast furnace. That is why it is becoming the first choice for steel making in emerging economies. For example, since 2005, India has become the second largest EAF-based steel producer in the world, after China, and its EAF production exceeds that of the United States. The steel production through EAF route is projected to be 31% by 2025. The quality of the steel produced through EAF route is far better than that of produced by induction furnace.

Presently, 95% of Pakistani steel firms are using the induction furnace processes for production except the Pakistan Steel, in public, and Agha Steel Industries Ltd in private sectors. The steel producing firms in Pakistan are highly reluctant to adopt the Electric Arc Furnace (EAF) technologies as they perceive “cost with no return”.

This reluctance to shift from induction furnace toward blast or electric arc furnaces technologies may pose several challenges to firms in local steel industry. In past, the same has happened to our Cement Industry where a number of factories were closed down due to their inability to adopt new technology, hampering industry growth at least by 2%, according to crude estimates. It resulted in closure of number of those cement factories that did not take proactive measures to adopt new technologies. The case of country’s Textile industry; the reduction of Pakistan’s share in global textile to 1.8% from 2.2% due to the inability to adopt latest technology, is another example of it.

Comment by Riaz Haq on November 6, 2020 at 9:14am

How Agha Steel plans to tech-disrupt the Pakistani steel industry
The steel manufacturing company is about to conduct Pakistan’s third IPO of the year and could be the largest Steel IPO in 5 years. What does Hussain Agha, the young CEO have planned up his sleeve?

https://profit.pakistantoday.com.pk/2020/09/27/how-agha-steel-plans...


Global steel production for 2019 stood at 1,867 million tons after rising 3.4% compared to the previous year. Production, however, contracted in all regions except Asia and the Middle East. China alone increased its production to 996 million tones in 2019, and increased its share of the global crude steel industry from 50.9% to 53.3%.

In comparison, the total steel demand of Pakistan is tiny, at around 7.1 million tons annually, of which imports meet 45% of local demand. Pakistan remains an under-penetrated market: the per capita steel consumption is the second-lowest in the world at 37 kilograms per capita against the global average of 240 kg per capita.

Domestically, the steel industry in Pakistan is divided into two sub-industries: flat products (coils and sheets) and long products (rebars and billets). The long steel sector in Pakistan accounts for 75% of total steel produced in Pakistan, and has more than 600 small players that have an estimated capacity of 5 million tons.


Long products are further divided into graded and ungraded. Graded accounts for 25% of long products, and are mainly produced in mini mills, which use induction furnaces, or an older form of steel production.

Ungraded is the most common form of steel production, which is basically ship breaking. In Pakistan the ship breaking industry is situated at Gadani, Balochistan, which features around 100 shipyards owned by various ship breakers. Ships are dismantled into steel scrap plates which are then sent to re-rolling mills.

There are some major problems with ship breaking. The most obvious one is that it is inefficient: the rebars made through this process are often of low quality. As customers move towards better quality and graded products, ship breaking is in decline.

But Pakistan is also one of a handful of countries in the world – along with India and Bangladesh – that even allows ship breaking to begin with. Ship breaking has massive environmental risks, allowing toxic elements to seep into the ship graveyard. It is also extremely dangerous for labourers, with fumes and explosions. It is why a labourer can expect to earn up to Rs70,000 a month – about four times the monthly minimum wage – in scrapping a ship at Gadani, though quite literally at the risk of their own life. Gadani itself is rampant with labour rights violations, just like in other developing countries.

Comment by Riaz Haq on November 10, 2020 at 9:22am

With a big part of the fragmented industry operating in the informal sector, it is almost impossible to estimate the exact domestic demand and supply ratio. But the industry estimates that the per capita steel consumption, according to the Pakistan Credit Rating Agency, has increased to over 43kgs (from less than 25kgs a decade back). Yet the per capita consumption remains one of the lowest in the world against the world average of over 240kgs.


https://www.dawn.com/news/1589282/bad-policy-good-intention


The steel demand has picked up sharply since June following the resumption of business activities after the decline in the Covid-19 infections in Pakistan. The unaudited accounts of some of the major companies listed on the Pakistan Stock Exchange (PSX) for the first quarter of the ongoing financial year to September confirm that the industry is on the path of quicker recovery from the severe pressures of the International Monetary Fund mandated economic stabilisation policies exacerbated by the negative impact of the coronavirus pandemic in the last quarter of the previous fiscal year.

The accounts show that the companies have recorded better top-line growth this year so far when compared with their performance during the corresponding period last year. The bottom lines of the steel manufacturers, who had suffered significant losses last year, are also turning green from red. The rebound in the fortunes of the steel firms is ascribed mainly to the pent-up demand unleashed by the Covid-19 economic stimulus package implemented by the State Bank of Pakistan (SBP), including the reduction of 6.25 percentage points in the policy interest rate to seven per cent, to fight off the effects.

“The impact of the construction and housing package announced by the government is yet to come on the steel industry,” Meher Kashif, the managing director of Model Steel, one of the largest steel companies with a manufacturing capacity of 600,000 ton, asserted during an interview with this correspondent. “The demand in the construction sector, which feeds into 35-40 allied manufacturing industries and services, remains subdued so far. The reasons are as clear as day: the public sector development spending has been slashed substantially; no new industrial project is being undertaken, and no large commercial project is coming up,” he elaborated.

Speaking about Prime Minister Imran Khan’s generous housing initiative, Kashif explained that the measures announced favoured the large corporate companies, which do not see much demand for housing in the market at this moment. The smaller contractors, who work with a capital of up to Rs100 million, do not find the package attractive enough because of requirements of documentation, he added.

“The developers and investors have used the construction package to purchase land but nobody has until now announced any major scheme. That’s why you see the land prices falling again. The government needs to find a solution to support the undocumented small builders who operate in the informal economy to construct one or two houses a year and inspire confidence and bridge the trust gap or the success of its housing initiative.”

The raft of lucrative policy, fiscal, and monetary measures announced to push-start construction and housing include no-question-asked-on-source-of-income-amnesty-scheme on the investments made in the construction industry before the end of 2020, and tax cuts and exemptions for real-estate developers and builders. These incentives were topped up later with cash support of Rs300,000 each on the first 100,000 housing units in the price range of under Rs2.5m (this does not include the cost of land) and subsidised mortgage finance for 10 years on the construction of 5-marla and 10-marla housing units.

Comment by Riaz Haq on December 9, 2020 at 10:22am

#Steel bars get pricier amid #construction boom in #Pakistan. Price hikes came at a time when #economic activities worth Rs1 trillion & Rs100 billion had been generated in Punjab & Khyber Pakhtunkhwa, respectively, in housing and construction projects. https://www.dawn.com/news/1593040

Manufacturers of quality steel bars increased their prices by up to Rs3,000 per tonne in November on the back of rising raw material costs in world markets and growing strength of the rupee against the dollar.

--
On Friday, Prime Minister Imran Khan was informed in a meeting of the National Coordination Committee on Housing Construction and Development that 6,000 apartments would be constructed in Karachi under a project called Pakistan Quarters. In the first phase, work would start on 700 residential units at a cost of Rs4 billion over the next three months.

Another meeting on the Karachi Transformation Plan (KTP) presided over by the premier was informed that more than 100 projects worth Rs1.1 trillion have been planned under the programme.

Mughal Iron and Steel Industries Chief Operating Officer Shakeel Ahmed said the company pushed up the price of good quality steel bars by Rs3,000 per tonne in November to Rs114,500-115,000 per tonne.

Ruling out the possibility of increasing the price of long-steel product to cash in on the rising demand in the northern areas owing to construction activities, he said raw material prices have risen to $370 per tonne from $330 per tonne in the last one month. It happened due to various reasons like port congestion and the fear of further lockdowns in world markets.

The management of Mughal Iron and Steel Industries had informed analysts of brokerage houses that the Naya Pakistan Housing Programme (NPHP) can potentially create 6-7m tonnes demand for long steel assuming the government builds 50 per cent of the promised houses.

The company views future demand to come from the China-Pakistan Economic Corridor (CPEC) and the five hydro dam projects. It has already won a contract for three dams. It estimates steel demand of 350,000 tonnes from Bhasha Dam and 250,000 tonnes from Mohmand Dam in the first phase.

Razaque Steels Managing Director Irshad Mowjee, who also serves as general secretary of the National Steel Advisory Council (NSAC), said his company has increased the price by Rs3,000 on two kinds of quality steel bars, which now cost Rs111,500 and Rs116,500 per tonne.

Shredded scrap prices in world markets have risen due to lockdowns in Europe and the United States. The supply of scrap has become scarce, resulting in a hike in international prices. Yards do not have materials and the incoming supply is limited, resulting in the prices going up by $40 per tonne within the last three weeks, he added.

Fearing a further increase in steel bar prices if scrap rates do not come down, he suggested that the regulatory duty on raw materials should be abolished. The duty is not justified on raw materials used in a basic industry as industrialisation is the government’s top priority.

If it is not removed, it will affect the viability of CPEC projects. Cost overruns will happen as steel is a major component, he said.

Mr Mowjee urged the government to remove the additional customs duty of 2pc as competing raw materials are exempted from it. At present, the incidence of tax is around Rs23,000 per tonne, which needs to be reduced, he added.

Shredded scrap is used for manufacturing good quality bars for infrastructure projects. Increasing prices will affect the viability of CPEC projects, he said.

Gadani supplies ship plates that are used as raw material for lower-quality steel bars. Their prices have not increased, thus making bars made from steel billets uncompetitive. This may cause a drop in the production of good quality bars for infrastructure projects, he said.

Comment by Riaz Haq on December 23, 2020 at 6:40pm

Cement, steel prices continue to soar
Uptrend hampering recovery of construction activities in country

https://tribune.com.pk/story/2277008/cement-steel-prices-continue-t...

Owing to an expected jump in demand for steel and cement around the globe following the invention of Covid-19 vaccines, the uptrend in local prices for the two commodities has accelerated, which is hampering the recovery of construction activities in Pakistan.

Amreli Steels has announced a hike in the price of rebars by Rs5,000 per ton in addition to an increase of Rs5,000 per ton announced earlier during the month, said JS Global analyst Arsalan Ahmed in comments to The Express Tribune.

“It appears that the decision has been taken on the back of uptick in global scrap prices by almost $60 (Rs9,600) per ton,” he said. “After the recent increase, the price of rebars of the company stands at Rs128,000 per ton.”

Pakistan Association of Large Steel Producers (PALSP) Secretary General Syed Wajid Bukhari said that the price of scrap had soared from $300 per ton in early November 2020 to $450 per ton now due to shortage in the international market.

“The price has risen exponentially and several local mills have stopped buying raw material for now,” he said.

Dawood Hercules Corporation Research Lead Karim Punjani said owing to the rollout of Covid-19 vaccines, the international prices of the two commodities had soared.

“Companies expect demand for their products to skyrocket, hence prices of inputs including coal and steel scrap have hiked across the world,” he said.

Prior to the introduction of vaccines, Covid-19 was denting the global economy, he said. However, following the invention of vaccines, Covid-19 is being perceived as a disease, not a pandemic, which can be contained and losses borne on account of the virus can be recovered.

“This has led to a significant rise in demand,” he said. “Coal was priced at around $80 per ton before the global lockdown was imposed in March and fell to $65 when the lockdown was lifted.”

Given the current jump in demand, the price of coal has jumped to $90 per ton, said Punjani.

He added that local demand for steel and cement also swelled following Prime Minister Imran Khan’s announcement of a relief package for the construction sector.

He pointed out that instead of absorbing the hike in prices of inputs, companies were passing on the impact to consumers.

“A seasonal impact is also being witnessed with regard to coal prices,” he said. “In winters, hydropower plants observe maintenance shutdowns and countries generate electricity through coal and LNG plants.”

However, some builders have a different opinion about the hike in prices of cement and steel as they claim that the producers are taking benefit of the surge in demand for the two commodities.

“It is a conspiracy against Prime Minister’s Naya Pakistan Housing Scheme as well as the national economy,” said Association of Builders and Developers of Pakistan (ABAD) Chairman Fayyaz Ilyas in a statement issued in the backdrop of a sudden rise in steel and cement prices.

He urged the federal government to take immediate action against the industries which were trying to sabotage the steps taken by the government to revive the national economy.

Even though most of the raw material is local, cement and steel manufacturers have raised prices of their products to Rs625 for a 50kg bag of cement and Rs126,500 per ton of steel, which is not justified.

He was of the view that the cartel of cement and steel manufacturers seemed determined to crush the construction industry.

“Cement and steel are the main inputs for the construction sector but manufacturers of the two products are busy minting money without any justification and authorities are helpless to take any steps against these cartels,” he added.

Comment by Riaz Haq on April 5, 2021 at 8:23pm

Federal Minister for Planning and Development Asad Umar said on Sunday afternoon said that Century Steel, a Chinese firm with an investment of US $240 million, would set up a steel mill in Rashakai Special Economic Zone (SEZ) which would produce about 1.5 million tons of steel.

https://gwadarpro.pk/1378965463858860033/chinese-company-to-produce...

Addressing the reception ceremony of the first consignment, carrying equipment and machinery for Century Steel at Karachi Port to set up a steel mill in the Rashakai SEZ, Umar said this occasion was another manifestation of exceptional relation between Pakistan and China.

He said the Chinese firm would also employ over 600 Pakistanis during the construction phase while in the second phase over 1000 people would be provided jobs.

According to an official statement, Umar said projects under China Pakistan Economic Corridor (CPEC) were progressing at a fast pace during the tenure of the incumbent government.

He informed that China Road and Bridge Corporation, (CRBC), a Chinese firm had entered into an agreement with Pakistan under CPEC to promote foreign investments for development and marketing in Rashakai SEZ.

He said the work for the provision of necessities including electricity and others at Rashakai SEZ was underway at a fast pace.

Asad Umar said CPEC was now entering into the most important second phase. The projects were now not limited to infrastructure only.

He said the bilateral relation between Pakistan and China was not new and whenever Pakistan needed a friend China was there.

Comment by Riaz Haq on November 29, 2021 at 9:59am

Iron, steel output swells to 4.7m tonnes

https://www.dawn.com/news/1646475

KARACHI: The production of iron and steel, with billets/ingots mainly used in the construction industry, in the last 10 years swelled by 196 per cent to 4.777 million tonnes in FY21 from 1.616m tonnes in FY12.

H/CR sheets/strips, coils/plates, also known as flat steel products for production of electronics, surged to 3.296m tonnes in FY21 from 1.850m tonnes in FY12, Pakistan Bureau of Statistics (PBS) data of Large-Scale Manufacturing (LSM) showed.

Rising production of steel related products has led to higher imports of raw materials. For making steel bars, the country’s iron and steel scrap imports in FY21 rose to 4.719m tonnes costing $1.86bn from 1.568m tonnes valuing $538m in 2011-12, the PBS figures showed.

Besides, iron and steel imports swelled to 2.992m tonnes amounting to $1.959bn in FY21 from 1.755m tonnes ($1.4bn) in 2011-12.


Commenting on rising demand for steel bars, Pakistan Association of Large Steel Producers Secretary General Syed Wajid Bukhari said steel bar production till 2011-12 was about three to 3.5m tonnes while the current demand now hovers between 6.5m tonnes to 7m tonnes.

He attributed increase in steel bar prices to soaring scrap prices in the world market to $550 per tonne from $300 per tonne while one dollar is now equal to 168 as compared to Rs85 in 2011-12.

He said gas price increased to Rs97 per unit from Rs15 per unit in the last 10 years followed by power tariff to Rs21 per unit from Rs6 per unit. Freight charges are 100 per high now.

Mr Bukhari was of the view that steel bar demand would soar to nine to 10 million tonnes by 2023-24 in view of rising construction activities.

Private sector consumes 80pc of total steel bar production as compared to 20pc by the public sector, he added.

Hassan Bakhshi, former chairman Association of Builders and Developers (ABAD), said a multi-storey high project to be built on 1,000 yards plot with three floors for car parking requires around 1,100 tonnes of steel bars.

He claimed that steel bar demand has been on the rise due to 80pc construction work on highrise projects in Punjab while the Sindh Building Control Authority (SBCA) has been creating problems in clearing new projects.

“Only 91 projects have been cleared by the SBCA in the last two years in Karachi as compared to 500-7,000 projects a year some 10 years back,” he said.

The projects being promoted on the social, print and electronic media belong to Punjab while in Karachi, advertisement campaigns have been running for old projects which had been approved very late.

Pakistan Association of Parts and Accessories Manufacturers Association chairman Abdul Rehman Aizaz was of the view that auto assemblers and their vendors consume 15,000-20,000 tonnes per month of iron and steel in different forms which are used in making different parts by the vendors and the assemblers.

Bike production swelled to 2.475m units from 1.645m units in FY12, while jeeps/cars production rose to 163,122 units from 154,706 units in FY12.

Trucks and buses production in FY21 jumped to 3,808 and 570 units from 2,597 and 568 units FY12.

Domestic appliances and electronic products have shown phenomenal growth in the last 10 years. For example, production of refrigerators, deep freezers and air conditioners has swelled to 1.337m units, 109,029 units and 505,493 units from 1.062m units, 56,313 units and 240,338 units in FY12. Electric fans production rose to 2.498m units from 1.908m units.

Comment by Riaz Haq on January 20, 2022 at 2:12pm

Reports have appeared recently in the press on initiatives for the revival of Tuwairqi Steel Mills Limited (TSML), which had been established in 2008 in the vicinity of Pakistan Steel Mills.

It could not be commissioned due to a gas pricing dispute. Finance Adviser Shaukat Tarin has reportedly asked the relevant agencies to look into the case.

https://tribune.com.pk/story/2335753/tuwairqi-steels-revival-initia...


Many new developments, both positive and negative, have taken place since 2008. Gas in Pakistan has become scarce, gas prices have increased and there is great uncertainty in international prices.

Thus, the prospects of any mutually acceptable and viable solution do not appear to be bright.

On the positive side, however, there are two major technological and resource developments, which may help develop a viable solution for TSML’s revival.

TSML claims an investment of $350 million, which remains stranded due to the gas price dispute. It has knocked the doors of international arbitration. It intends to put another $700 million for the revival. It also wants to use local iron ore.

TSML expected gas supply at a low rate of $1.23 per million British thermal units (mmbtu) – a price that is offered to priority sectors like fertiliser producers. There is no evidence or contract to that effect.

Many people even object to the fertiliser industry being given such a low tariff rate, not to talk of the steel sector.

As annual gas demand of TSML is 12 billion cubic feet (32.877 million cubic feet per day), it would mean a subsidy of $16.2 million per annum and $162 million for 10 years.

If the opportunity cost of LNG is assumed at $10 per mmbtu, it would mean a subsidy of $48 million per year, the critics may argue.

The two developments are global hydrogen initiative and Thar coal development in Pakistan.

In 2008, Thar coal was buried under the desert. Only recently, Thar coal has come above the surface. There are two major coal mining and power initiatives – one launched by SECMC and the other by SSRM.

A 10,000-megawatt coal power plant may be built shortly, although green initiatives have thrown some uncertainty in this direction.

Initial studies have been done, exploring the possibilities of Thar coal gasification producing both syngas and liquid fuels such as diesel. Thar coal-based syngas can be an ideal, even better, solution for the Midrex-DRI process that TSML has installed.

Cost aspect is uncertain but it is projected that it may be cheaper than LNG.

The other development is global hydrogen initiative. Hydrogen can be utilised in reducing iron ore.

Iron ore is usually in oxide form. In the conventional blast furnace process as installed at Pakistan Steel, carbon/ coke is utilised for reducing iron ore and adding carbon for carburisation.

In the alternative processes, hydrogen is used in various combinations to reduce iron ore and carbon is added in various forms for carburisation.

Fortunately, TSML’s vertical shaft Midrex process is amenable to conversion to hydrogen.

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    Independent candidates backed by the Pakistan Tehreek e Insaf (PTI) party emerged as the largest single block with 93 seats in the nation's parliament in the general elections held on February 8, 2024.  This feat was accomplished in spite of huge obstacles thrown in front of the PTI's top leader Imran Khan and his party leaders and supporters by Pakistan's powerful military…

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    Posted by Riaz Haq on February 16, 2024 at 9:22pm — 1 Comment

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