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ISLAMABAD: The production of steel has been increased to 97 percent to overcome the present situation in the sector, Minister for Finance Shaukat Aziz Wednesday informed the Senate.

Aziz said that the situation had arisen following massive export of the mineral to China and the government was closely watching the situation, he said in response to a point of order by Professor Ghafoor Ahmed.

He said that the steel being the essential commodity in most of the industrial sector, a close interaction was being maintained with all the stakeholders to overcome the situation. He hoped that the situation will start improving soon as the supply of steel has been improved.

Earlier, a press released issued by Pakistan Steel on Monday said that the international phenomena, notwithstanding, Pakistan Steel increases prices of its products when extremely essential.

Pakistan Steel claims that current prices of Pakistan Steel products are still lower than the international market. In support of this claim, Pakistan Steel refers market figures. The landed cost of imported Billet, Pig Iron, Hot Rolled Coil and Cold Rolled Coil was Rs 30,114, Rs 20,317, Rs 41,668 and Rs 45,513 per metric ton respectively. Pakistan Steel’s corresponding prices of each item as on 04.3.2004 were Rs 28,500, Rs 18,700. Rs 32,000 and Rs 38,000.

Pakistan Steel explained that extremely high freight charges were one of the major causes of the price hike. This has been illustrated by what may be described as the “China” factor.

About 70 percent of the raw material supplies in the global market were lifted by China, but China had completely stopped the export of its raw materials, also, in view of their ever rising domestic needs. China had also placed order for import of billions of dollars worth of scrap and raw materials from Australia and other countries, causing extreme pressures on international shipping lines and as a result, their freight charges also went up by over 100 percent.

Consequently, the scarcity of raw materials, mainly the iron ores had caused dramatic increase in prices. The short supply of raw material is reflected in the fact that in response to an international tender for coal floated by the Pakistan Steel, only 5 responses were received as compared to 28 five year ago.