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Constructive outlook of Pakistan steel industry

According to the world steel association, the world crude steel production for the 64 countries was recorded 146.7 million ton (mt) during January 2019, a 1.0 percent rise as against to January 2018. Furthermore, the country-wise statistics also recorded that China’s crude steel production for January 2019 was 75.0 mt a rise of 4.3 percent as against to January 2018. India produced 9.2 mt of crude steel in January 2019, down 1.9 percent in January 2018. Japan produced 8.1 mt of crude steel during January 2019, down 9.8 percent in January 2018. South Korea’s crude steel production reached at 6.2 mt, down 1.5 percent on January 2018.

The association also recorded that in the EU, Italy’s crude steel production for January 2019 was 2.0 mt, down by 3.6 percent in January 2018. France produced 1.2 mt of crude steel in January 2019, a decline of 9.7 percent as against to January 2018. Spain produced 1.2 mt of crude steel in January 2019, a rise of 5.9 percent in January 2018. The US produced 7.6 mt of crude steel in January 2019, an 11.0 percent rise in January 2018. Crude steel production in Ukraine was 1.9 mt in January 2019, down 4.9 percent in January 2018. Brazil’s crude steel production for January 2019 was 2.9 mt, up by 2.3 percent in January 2018. Turkey’s crude steel production for January 2019 was recorded 2.6 mt, down by 19.5 percent in January 2018.

In the developing countries like Pakistan, an analysis of import predicts indicate domestic steel consumption is 9 million tons per annum or about 45kg per capita in comparison to the world average of 228kg per capita. Presently 60 percent of Pakistan’s steel consumption is in long products whereas 40 percent is in flat products. The experts also estimate that the consumption trend would continue and double to 18 million tons over the upcoming 5-year and the ratio of long to flat products will start correcting itself to the globe norm of 52 percent long and 48 percent flat. Sources also recorded that effectively there was a time lag between planning and implementation. The housing, infrastructure and automobiles sector have increased at a phenomenal rate. They have also urged that the substantial growth in long products, rebar’s mostly was at a CAGR of 15 percent owing to the expansion in the infrastructure and building sectors.

The industry experts also registered that the white goods and automotive sector, which are large consumers of flat products is not nearly as developed in the country. The total consumption of Cold Rolled Steel (CRC) in Pakistan is 800,000 tons per annum and of Galvanized Steel (GI) is 600,000 tons. Experts revealed in different sources that if the Government of Pakistan produces steel locally, it will cost more than importing from China who presently accounts for 55 percent of the world’s steel output and have the economies of scale on their side. It is also proclaimed that there is 229 percent anti-dumping duty imposed by the US on Chinese steel and similar is the case for Europe. Almost every country in the world has a protective duty on Chinese steel. And it is not just steel.

China has humongous over-capacity and has become virtually the workshop of the world. Generally, there are two ways to manufacture steel. One is through blast furnace steel making where the basic raw materials are iron ore and coal or the second one is the electric arc furnace method where steel scrap, pig iron or direct reduced iron (DRI) are melted in an electric arc furnace to produce the molten metal. In both cases the molten metal is cast into slabs subsequently and rolled whilst red hot into hot rolled coils (HRC). In Pakistan, the demand of steel may increase because of CPEC, construction of dams and recovery in domestic construction industry once the Naya Pakistan Housing Scheme enters the execution phase.

The experts furthermore recorded that Pakistan Steel until shut down a few years ago utilized to manufacture HRC by the blast furnace method. Its blast furnace could only produce 1.0 mt yearly, which is considered an uneconomical size presently. Statistics also showed that the blast furnace technology that Pakistan steel mills utilizes can only be economical with an output of over 3 million tons per annum. Whilst their infrastructure is excellent and is suited to support this level of production substantial subsidiary equipment will require replacement.

 

Brief look of steel industries:
Abbas Steel

Abbas Steel Group Pakistan’s leading steel manufacturer and importer of steel products, comprises of a combination of automatic and manual re-rolling mills which have the combined capacity to produce approx. 200,000 mt of steel as well as several sales centers spread out in Pakistan.

Agha Steel

Agha Steel actively offers a wide range of alloy, carbon and mild steel billets manufactured using premium quality raw material. ASI’s range of billets is absolutely corrosion resistant and contains high tensile strength.

Aisha Steel

Aisha Steel Mills Limited (ASML) is a state of the art cold rolling & hot dipped galvanized rolling complex with an overall capacity of 700,000 metric tons per annum. ASML is one of the largest private sector investments in the value added flat-rolled steel industry in Pakistan.

Amreli Steel

Amreli Steels has grown from being a family owned company to one of the most prestigious companies. The company has the largest billet manufacturing plant in Pakistan with a capacity of producing 400,000 tons of billets.

International Steels

International Steels Limited is the largest Flat Steel manufacturer in Pakistan. ISL’s 1,000,000 Metric tons per annum steel complex produces Cold Rolled, Galvanized and Color Coated Steel from hot rolled coils.

Mughal Steel

Mughal Iron and Steel Industries Limited (MISIL) has proven itself as a trendsetter in the iron and steel industry of Pakistan to bring forth steel, which resonates and glazes to get acknowledged as ‘steel that endures, persists and continues to support neither progenies nor generations, but dynasties’.

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