KARACHI: Pakistan Association of Large Steel Producers (PALSP) on Monday warned of shutdown of the steel industry due to scarcity of raw materials as banks have failed to open letters of credit (LCs) for import.

PALSP stated that despite government assurances, the steel sector’s LCs had not been opened so far due to an acute shortage of raw materials. Big steel manufacturers further stressed that 90% of the steel sector was in danger of closing down and that there might not be any steel available for the construction industry.

Closure of the steel industry could have brutal consequences like the closure of steel and construction industries which will lead to unemployment of around 200,000 to 5,000,000. As per PALSP, this step toward de-industrialization can also cause the closure of the cement industry and the unemployment of 2,000,000 people.

Steel association also warns of halting flood rehabilitation work, govt projects and mega dams’ projects.

In recent years Iron and Steel industry emerged as the 6th largest exporting sector of Pakistan.

Earlier, Syed Wajid Bukhari, Secretary General of the Pakistan Association of Large Steel Producers (PALSP) said in a statement, “The crisis-hit steel industry is facing an acute shortage of raw material scrap, with the situation going from bad to worse every day. The local price of scrap has jumped from Rs120,000 to Rs200,000 per tonne in just three weeks, forcing many mills to shut down. Only 30% of the mills are operating and that too at very low utilization rates. Record scrap prices threaten to paralyze the steel industry.”

He further added that steel is an important sector for Pakistan’s economy, contributing over 5% to the nation’s GDP and providing employment for more than 200,000 people with an annual production capacity of more than 5 million tonnes.

Bukhari also issued a warning that the economy and the general populace could suffer greatly if Pakistan’s steel production dropped by more than 50% the following year. “The steel industry is the backbone of the economy, and if we do not take action now, the consequences will be dire,” warned Bukhari.