The steel industry, a cornerstone for industrial economic growth in Pakistan, plays a pivotal role in various sectors like construction, transportation, machinery, metal products, energy, and domestic appliances. Understanding the dynamics of this industry is crucial for comprehending its impact on the nation’s economic landscape.
Steel, a composite material, primarily consists of two components: iron ore and recyclable steel. This industry is known for being factor-intensive, requiring large factories, iron ore, energy, and labor. The high cost and low return pose significant barriers for new investors attempting to enter the market.
In January 1971, the Soviet Union extended support for the construction of Pakistan’s steel mill, providing both technology and financial assistance. The integrated steel industry’s construction commenced under the guidance of Soviet experts. The Price Control and Prevention of Profiteering and Hoarding Act, 1977, further shaped the industry landscape.
Following the completion of the steel mill, subsequent private investments led to the establishment of new steel production units. Presently, the steel industry stands as a massive production unit with 600 smaller and larger mills, boasting a production capacity of 3.3 million tons in 2019, contributing 0.18 percent to global production.
Pakistan’s steel industry is dominated by major players in the organised sector. Noteworthy entities such as Amreli, Agha, Mughal, Frontier Foundry Steel, Razaque, Bilal, and Aitamad Steels hold substantial market shares, collectively constituting 80 percent of the total market.
According to the Steel Sector Overview 2020 by PACRA, the combined revenue of the top 20 major players in the organized sector amounted to PKR 150 billion in FY 2020. The market capitalization of prominent players reflects their significant influence in the industry:
As the steel industry in Pakistan continues to evolve, exploring future prospects and addressing challenges becomes imperative. The sector’s growth hinges on technological advancements, sustainable practices, and strategic partnerships to overcome obstacles and seize opportunities in a dynamic global market.
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