Pakistan’s Recorder has quoted brokerage house Arif Habib Limited as saying that the ongoing shortage of dollars and the industry's inability to secure Letters of Credit for import of raw materials is expected to hit the profitability of the construction sector and may lead to a country-wide steel shortage in the coming days. Arif Habib Limited highlighted that “Given the short supply of US dollars in the country, amid external repayments and delay in the International Monetary Fund programme, the State Bank of Pakistan took various administrative measures including limits on LC opening, ban on certain imports and curbs on dollar repatriation to keep dollar outflows in check and minimize current account deficit. Although the ban on imports has been eased as per a circular of the SBP, it is not being fully implemented in spirit.” Arif Habib Limited cautioned “The domestic steel industry, especially the graded steel industry, which heavily relies on the imports of scrap for the production of long steel and HRC as raw material for flat steel, remains highly vulnerable. Therefore, the restriction on LC opening poses dire consequences for the availability of steel going forward. Local players will run out of steel raw material and become forcefully non-operational if no LCs is opened within the next 30 days.” Arif Habib Limited added “This will have a multiplier effect on the domestic construction industry; without steel rebars in the country, construction activity will face hurdles, slashing demand for cement and 40 other industries such as glass, tiles, cables, PVC, pipes, appliances, wood and furniture, clay, bricks etc.”
Pakistan’s Recorder has quoted brokerage house Arif Habib Limited as saying that the ongoing shortage of dollars and the industry's inability to secure Letters of Credit for import of raw materials is expected to hit the profitability of the construction sector and may lead to a country-wide steel shortage in the coming days. Arif Habib Limited highlighted that “Given the short supply of US dollars in the country, amid external repayments and delay in the International Monetary Fund programme, the State Bank of Pakistan took various administrative measures including limits on LC opening, ban on certain imports and curbs on dollar repatriation to keep dollar outflows in check and minimize current account deficit. Although the ban on imports has been eased as per a circular of the SBP, it is not being fully implemented in spirit.” Arif Habib Limited cautioned “The domestic steel industry, especially the graded steel industry, which heavily relies on the imports of scrap for the production of long steel and HRC as raw material for flat steel, remains highly vulnerable. Therefore, the restriction on LC opening poses dire consequences for the availability of steel going forward. Local players will run out of steel raw material and become forcefully non-operational if no LCs is opened within the next 30 days.” Arif Habib Limited added “This will have a multiplier effect on the domestic construction industry; without steel rebars in the country, construction activity will face hurdles, slashing demand for cement and 40 other industries such as glass, tiles, cables, PVC, pipes, appliances, wood and furniture, clay, bricks etc.”
