Strong economic growth over the last decade has directly resulted in an increase in demand for steel by various sectors such as the manufacturing and construction industries both of which have exhibited growth over the last 5 years.

However, Pakistan is still amongst the lowest per capita consumers of steel at 37 kilogram in comparison to the regional average of 207.8 kilogram and world average of 181.5 kilogram, presenting an opportunity for the steel sector to grow manifold and for investors to tap into a largely unexplored market with significant upside potential.

The organized sector comprises corporate which cumulatively have an annual production capacity of up to 1.3 million tonnes. The actual capacity utilization is limited to 17.4% due to the fact that approximately 60% of the total available capacity is yet to achieve commercial operations.

Pakistan Steel Mills which currently has a production capacity of 1.1 million tonnes is running inefficiently at a capacity utilization of 43%. This sector is fragmented with an estimated 100 units operating in the country. Total installed capacity of smelters is estimated at approximately 2.7 million tonnes per annum.

Pakistan has historically relied heavily on imports of steel from various countries to meet its growing local demand. As per the statistics provided by the State Bank of Pakistan, approximately USD 830 million worth of iron and steel products have been imported during the half year July to December 2010. It is estimated that this figure will grow to approximately USD 1,700 million for the fiscal year ended 2011.

(Sourced from Gulftoday.ae)