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Pakistan’s steel association PALSP has demanded a reversal of the recently announced reduction in import duties and exemption of custom duties on billets. 


The Pakistan Association of Large Steel Producers (PALSP) has asked to the government to re-visit the budgetary provisions for FY2020-21 that reduced import duties on billets. The association has also requested the government to withdraw the exemption of custom duty and regulatory duty on steel billets for wire rod manufacturers and to bring duties and taxes on ship plates and re-rollable material to levels that are at least equal to that of billets.


In 2020-21 budget, Pakistan’s government has permitted steel and wire rod manufacturers to import billets by reducing duties and taxes, according to PALSP. All major representatives of domestic steel sector have urged the authorities to keep import duties in place to protect domestic billet manufacturers. They anticipate that the reduction in import duties can be misused. Many re-rollers do not have integrated wire rod manufacturing capacity and they could use cheaper or smuggled imported billets for rolling construction bars.  


To bring all three ways of rebar manufacturing at par, there should be reduction of customs duty on heavy meltable scrap, the basic raw material of melting industry under PCT code HS7204.4990, which was not done in this budget, stated the association. The cost of steel billets manufacturing in the country should be equated to the cost of ship plates (vessel for demolition PCT code 8908.0000) and re-rollable material PCT code 7204.4910 by imposing a 25pc duties on both the items, immediately.  


The present anomalies could hurt domestic steel mills and reduce taxes revenue of the government by over tens of billions of rupees. The decision will also negatively impact precious foreign exchange income of the country and lead to depreciation of the currency in the coming days, opined PALSP.  


The steel industry should be exempt from the applicability of Section 8b of the Sales Tax Act 1990 and amendments to Section 27a of the Customs Act must be made in order to discourage mutilation of prime steel products, said the association.


Pakistan has around 200 steel manufacturing units capable of producing over about 6-7mn mt steel products, annually. Of these less than five manufacturers have dedicated capacity to produce wire rod by using billets. The country’s domestic rebar demand is being fulfilled by leading steelmakers, however, with cheaper billet imports even re-rollers would start supplying rebar creating excess supply in the country.


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