Islamabad: Arif Habib Limited (AHL) – a brokerage house – stated in a report that a country might face a steel shortage in the coming days as the profitability of the construction sector will adversely be affected due to the short supply of dollars and limitations to secure Letters of Credit (LC) for import of raw materials, according to news published in the leading newspaper on January 17.
As per the details, AHL highlighted that due to the ongoing shortage of US Dollars in the country, the State Bank of Pakistan (SBP) took various administrative measures including a ban on certain imports, limits on LC opening, curbs on dollar repatriation to keep dollar outflows in check and minimise the current account deficit. Despite the SBP’s order to ease the ban on imports, it is not being implemented in spirit.
The brokerage house stated that they expect the SBP to ease the administrative measures as they will pose a threat to the local construction and allied industry in near future. It was highlighted that the local steel industry, especially the graded steel industry, will be affected to a greater extent as it relied on the imports of scrap (for the production of long steel) and hot rolled coil (raw material for flat steel). The report stated that the restriction on LC opening poses dire consequences for the availability of steel.
In the report, AHL disclosed that local players will run out of steel and might be forced to halt operations if LCs are not opened within 30 days. It will have varying impacts on the construction industry. Without steel rebars, construction activities will have to face hurdles and delays, and reduced demand for cement and other industries including cable, clays, glass, tiles, PVC, appliances, pipes, etc.
Iqra holds BS in International Relations and is passionate about writing engaging content on trending real estate topics. When not working, she is either spending time with family, shopping, or discussing shows & movies.
