960402

Foundries hit by 50 pc

supply cut from

shipbreaking sources

SHAHID IQBAL

KARACHI: The foundries are running short of steel and steel products, as the ship-breaking industry seems unable to supply, raw iron even up to 50 percent of last year's supplies. Besides, the scrap will be more costly than in previous years.

The shipbreaking industry, the main source of raw material supply for the foundries, has failed to import enough scrap ships this year. Its imports during the last nine months have been just 50 percent of last year. "We have so far imported 20 ships from July 1995 to March 1996 and more ships are expected to arrive by the end of fiscal year", said an importer of scrap ships.

The industry had imported upto 40 ships last year, 1994-95 which was a better performance than the previous year's.

The government levied a 5 percent custom duty on the scrap for the year 1995-96. A protest against the duty was lodged but the government did not entertain it. "The imposition of duty initially slowed down the performance of the industry but soon it came out from the situation and recovered herself", said the secretary of Pakistan Ship Breakers Association in an interview to Business Recorder.

The shipbreakers were of the opinion that the industry had started to recover from the shock of 5 percent excise duty. They expressed the hope that their performance would be better this year.

The average weight of a ship is around 25,000 tons to 35,000 tons. "Although the industrial growth is slow in the country, the rising demand for iron and steel has put enough pressure for greater production.

The ship breakers believe that at least 20 more ships could come by the end of this year. However, they could not give the exact number of ships booked for this year.

They said that the industry was faced with several problems which had increased the cost of scrap. Firstly the ships are more costly this year than before. Then the government added to the cost by imposing customs duty. Finally the devaluation of the rupee increased the cost of scrap in the domestic market.

Prices of steel and all kinds of steel products have increased in the local market. Prices of steel bars have increased to Rs 22,000 per ton from Rs 18,000 per ton. There is a shortage of steel products in the market which compelled the Pakistan Steel to import 10,00,000 tons of pig iron this year. Pakistan Steel Re-Rolling Mills Association has already demanded permission to import raw material for steel industries.

The Association argu that the consumption had increased by 45 percent this year and the market was unable to feed the foundries. According to their estimate, the consumption of billets, ingots and shedder steel has increased to 17,00,000 tons while the market could provide only 12,00,000 tons for the whole year.