The Competition Commission of Pakistan (CCP) has released a comprehensive Competition Assessment Study of the Steel Sector in Pakistan, identifying critical market distortions and recommending the creation of a dedicated Steel Ministry to ensure coordinated policy and oversight.
The report emphasizes the absence of a national steel policy as a key structural gap, drawing on successful governance models from China and India.
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Pakistan’s manufacturing sector, which contributes 71% of total exports and employs about 15% of the workforce, remains central to the country’s industrial base. Within this, the steel industry plays a vital role, accounting for more than 69% of large-scale manufacturing and 8.2% of GDP. During FY24, local steel output reached 8.4 million metric tons, including 4.9 million tons of long steel and 3.5 million tons of flat products. Steel scrap imports totaled 2.7 million tons, underscoring the industry’s dependence on imported inputs. Despite these figures, per capita steel consumption remains only 47 kilograms—among the lowest in the region—indicating sluggish industrial and infrastructure growth.
The CCP noted that Pakistan Steel Mills (PSM), once a strategic national asset with a capacity of 1.1 million tons, has remained closed since 2015 due to outdated technology and financial collapse, leaving liabilities exceeding Rs400 billion. By contrast, steel industries in China, India, and Russia have expanded through strategic investment, state support, and technological modernization. The report urges Pakistan to develop local iron ore resources, upgrade infrastructure, and adopt sustainable, energy-efficient production methods to compete globally.
The study identifies multiple regulatory and structural barriers constraining competitiveness. The Ease of Doing Business Committee lacks industry expertise, frequent Statutory Regulatory Orders (SROs) create policy uncertainty, and there is still no unified national steel policy. Around 50–60% of domestic steel is substandard due to weak quality enforcement, disadvantaging compliant producers. Tax exemptions for mills in erstwhile FATA and PATA regions have created major market distortions, with roughly 1.5 million tons of untaxed steel entering settled areas annually—causing an estimated Rs40 billion in revenue losses.
The CCP found that the sector remains fragmented, with high entry barriers, minimal R&D spending, and an overreliance on imported scrap that exposes producers to international price shocks. Market concentration, policy biases, and lack of diversification into high-value steel products further weaken competitiveness and limit export potential.
The report proposes a comprehensive reform framework: developing a national steel policy to stabilize regulations, rationalize taxation, and introduce anti-dumping protections; expanding the Committee on Ease of Doing Business to include industry experts and CCP representation; and accelerating National Tariff Commission procedures. It also calls for enforcing quality standards, formalizing undocumented producers, and eliminating regional tax distortions.
The CCP recommends encouraging environmentally friendly Direct Reduced Iron (DRI) technology, incentivizing local iron ore mining and value addition, and promoting green production processes to align with global sustainability standards.
The Commission stated it will continue working with policymakers, industry stakeholders, and regulatory bodies to introduce pro-competition reforms, improve transparency, and ensure the long-term growth and sustainability of Pakistan’s steel sector. The full report is available on the CCP’s official website.
