Express Tribune – Cost of production: PSMA urges revision of duty on ship-breaking

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10 September 2013 – KARACHI: Pakistan Steel Manufacturer Association (PSMA), a newly formed lobbying group of steel makers, reiterated their stance on Monday, asking the government to revisit duty structures on the ship-breaking industry to provide a level playing field to all players in the steel industry.

PSMA members have become vocal recently following the government’s decision to increase electricity prices in the country which, according to them, has further widened the price difference between their steel products and those created by the ship breaking industry, which they see as their rivals.

“The government should take notice of the increased of price difference because it is badly hurting steel melters,” Chief Executive Amreli Steels, Abbas Akberali, said while speaking to a group of journalists at Pearl Continental hotel.

Akberali, whose steel mill is also a member of PSMA, said that the recent increase in electricity prices has pushed up end prices of steel billets in the formal steel sector by at least Rs5,000 per ton. That has taken the price difference of their final products to over Rs12,000-14,000 per ton.

PSMA members want the government to revisit the rate of federal excise duty (FED) on the ship breaking industry. They are asking the government to impose an FED of at least Rs10,000 per tonne on ship-breaking products to cut down the price difference of their billets to Rs2,000-3,000 per ton.

They argue that according to a previous agreement signed in the year 2000 by all major steel associations, the price difference between the two should not exceed Rs1,200 per ton.

The current price of shredded scrap from smelters is Rs69,645 per ton, compared with the ship breaking industry’s billets of Rs54,509 per ton – a difference of Rs15,136 per ton.

MFN status to India

“It is my considered opinion that Pakistan should have given most-favoured nation (MFN) status to India some 16-17 years ago,” Amreli Steels Chief Executive Abbas Akberali said while commenting on government assurances to the International Monetary Fund (IMF) that it will eventually grant MFN status to India.