Pakistan’s steel industry, which is already struggling like other industries in the country, has concerns that it will face a greater burden with the new monetary policy expected to be announced by the State Bank of Pakistan (SBP) on August 22, according to media reports.
The Pakistani steel industry is facing problems such as a liquidity shortage and is receiving approval for the opening of letters of credit for raw material imports, resulting in mills shutting down and supply chain problems. The country’s scrap imports amounted to 173,348 mt in July this year, decreasing by 22.5 percent compared to June and by 28.9 percent year on year.
Wajid Bukhari, secretary general of the Pakistan Association of Large Steel Producers, has evaluated the current interest rate in the country which stands at 15 percent, the highest since 1999, as unsustainable for the industry as the rate in other countries in the region is around 2-5 percent. He stated that, if the interest rate is not reduced, the industries will shut down as it is impossible to plan expansions or working capital with such abrupt changes, and unemployment will occur. The SBP has raised interest rates by 800 basis points since September 2021 and the steel industry expects a further rise in the next monetary policy meeting.