PSRMA Concerns about Cartelization in Steel Billet Industry

ISLAMABAD (Scrap Monster): PSRMA- Pakistan Steel Re Rolling Mills Association are very much concerned over the steel billet hikes by the local billet producers and this cartelization in the industry will affect the end consumers ultimately and will affect the proposed mega projects by the government directly.

In the country there are about 450 rolling mills and most of them are fully dependent on the local melting industry, ship breaking industry and imported Re Rollable scrap and billets. The prices of good quality local billet were at Rs 64000 per ton, before the budget announcement. But, recent budget has raised the taxes to the range of about Rs 3200 a ton and the prices has been increased of Rs 71,000 a ton. In the country there are only limited Melting units, where produce good quality billet and now these units are doing all efforts to raise the taxes and ITP prices in Imported Billets.

Budget has increased the ITP of imported billet by $25 a ton. Now the taxes on the imported steel billet are at Rs 12, 362 a ton but at the same time, local billet producers are still paying Rs 6400 per ton. There provides enough protection for the local billet producers but further protection will certainly lead to the cartelization, because good quality imported steel billets will not be cheap to import.

But still, the steel prices will increase further after all competition ends, because rolling mills will have no other option other than to buy from these limited billet mills which have already raised their prices in anticipation. This would lead to shutdown of many Rolling Mills, due to shortage in the raw material, loosing thousands of jobs. Imported Re Rollable Scrap and Billets are paying Sales Tax at 17 percent but the Local melting Industry is still paying Sales Tax at 10 percent even after the increase in the recent budget.

PSRMA said that it would be terrible if Cartelization happens in the steel industry. This is because if enough competitive raw materials are given to its members this will certainly happen and some of the large billet Mills who are enjoying the protection already will be imposed with a carte blanche to increase the prices with not any check from its competition.