In less than 24 hours, a number of print and electronic-media has published reports/articles citing the impacts of Coronavirus on steel industry.
Bloomberg in its latest story has talked about the fate of big orders, and anticipated delays. As the day of 9th Feb, 2020 is approaching closer, some steel producers outside China are cheering, while inside China are the worries over anticipated delays.
China produces 55% of the world steel and Wuhan province is now a home to both the Coronavirus and 4% of the whole China’s steel making that also meets around 20Mt internal demand on a week-to-week basis.
The Coronavirus has equally hit the headlines and the steel industry. Because it relies largely on commutation, medically fit human resources and mainly-transportation, the lockdown of over 60 million people in 13 cities of China is taking a serious tool over the steel production inside China.
The impasse in the supply of steel will hit the world on 9th day of Feb 2020, when China formally opens and steel-buyers across the world react to the misnomers of ‘China Can’t Disgorge Steel’.
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This calamity impresses upon a need for the land-locked China to consider transposing Pakistan into frontline state and secures its business interest worldwide.On the other hand, the Government of Pakistan (GoP) has much more pressing need consider the proposals for revival of steel industry which have been shelved for years.Stakeholders of steel industry should sit with Minister of Planning and Development, who is adroit at such situations as he launched OLPERS at a time when HALEEB plant was undergoing a 40-day maintenance. It’s a similar situation, but this time, it’s the country which can benefit.[/box]
By looking at the benefits that China and South Africa derived, the Government can consider ‘import tax rebate for steel industry’. While removal of customs and regulatory duties on scrap/raw material can serve as a shock absorber against blatant gush of devaluation, crowing out by government and taxation, the matter of removing anomalies of different import duty slabs within steel sector can help a lot.
Little can be expected in terms of actions from FBR, as the ‘Anomalies Committee’ of FBR is virtually inactive, as seasoned ‘Shabbar Zaidi’ (Syed Mohammad Shabbar Zaidi is a Pakistani Chartered Accountant who serves as the 26th and current Chairman of Federal Board of Revenue) has been ransacked unceremoniously.
This is high time that Government of Pakistan (GoP) can undo the frivolous past mistakes and actually bring the steel industry at take-off position by exceeding to the just demands of steel industry and its leaders.
[box type=”note” align=”” class=”” width=””]The writer Sani-e-Mehmood Khan is a Chief Executive Officer, Securities Exchange Management Suite.[/box]