The Competition Commission of Pakistan (CCP) on Monday released its “Competition Assessment Study of the Steel Sector in Pakistan” report, calling for the formulation of a national steel policy and recommending the establishment of a dedicated Steel Ministry in the country.
The report notes that the country’s manufacturing sector has been a cornerstone of economic expansion, contributing 71% of total exports and employing about 15% of the workforce. Exploring the steel industry’s role in the sector from a competition perspective, the CCP study notes that large scale manufacturing (LSM) alone accounts for over 69% of manufacturing and 8.2% of GDP.
In FY24, reads the report, local steel production stood at 8.4 million metric tons, comprising 4.9 million metric tons of long steel and 3.5 million metric tons of flat steel. Steel scrap imports stood at 2.7 million metric tons, underscoring the industry’s reliance on imported raw material. Per capital steel consumption remained at just 47kg, reflecting limited industrial activity and slower infrastructure development.
The CCP report said demand was driven by infrastructure development, urbanization, industrial growth, and major projects like the China-Pakistan Economic Corridor (CPEC), with construction and real estate key consumers. On the supply side, the industry faces heavy import dependence, energy constraints, and limited local raw material availability.
Pakistan Steel Mills (PSM), once a strategic asset with an annual capacity of 1.1 million tons, has been non-operational since 2015 due to financial losses and outdated technology, leaving liabilities of Rs. 400 billion. By contrast, international peers like China, India, and Russia advanced through government support, innovation, and strategic investment. Lessons from global players highlight the need for Pakistan to develop local coal and iron ore, modernize infrastructure, and adopt sustainable, energy-efficient technologies, advised the report.
It warned that regulatory and institutional inefficiencies exacerbate challenges, with the Ease of Doing Business Committee lacking industry expertise, SROs creating uncertainty, and a lack of a national steel policy hampering advancement. Substandard steel accounts for 50-60% of domestic production due to weak enforcement, disadvantaging compliant producers. Tax exemptions in ex-FATA/PATA distort competition, with 1.5 million tons of untaxed steel entering settled areas annually, causing Rs. 40 billion in revenue losses.
The sector also suffers from market concentration, policy biases, and limited diversification into high-value-added products. High entry barriers, the dominance of undocumented units, and minimal investment into research and development constrain competitiveness. Import dependency on scrap further exposes the industry to global shocks, while weak compliance erodes consumer trust and compromises safety.
The report recommends a comprehensive framework to improve the sector by developing a national steel policy, rationalizing taxes, ensuring stable SROs, and supporting anti-dumping protections. It also proposes expanding the Ease of Doing Business Committee to include industry experts and CCP representation, strengthening the ministries of Industries and Commerce, and accelerating NTC processes.
The state, the CCP advises, should enforce quality standards, formalize undocumented units, and eliminate distortions from ex-FATA/PATA exemptions. It should also encourage Direct Reduced Iron technology, incentivize iron ore mining and value addition, and promote green technologies.
The CCP says it would continue working with all the stakeholders to develop pro-competition reforms to promote competition and long-term sustainability in the steel sector, in line with the international best practices.