Pakistan is the World's Fastest Growing Steel Producer

Steel production in Pakistan jumped 39.3% to 5 million tons last year, according to World Steel Association. Earlier, Pakistan steel industry ramped up its output from 2.9 million tons in 2015 to 3.6 million tons in 2016.

While Pakistan's steel production growth is the world's fastest,  its relatively small steel production volume of 5 million tons ranks it 28th in the world. Other nations seeing strong growth in steel production are Iran (up 21.4%), Vietnam ( 31.9%) and Egypt (35%).   Iran ranks 13th with 21.7 million tons; Vietnam ranks 19th with 10.3 million tons; Egypt ranks 23rd with 6.8 million tons produced in 2017.

Some of the key names ramping up production capacity in Pakistan are Aisha Steel Mill (ASM),  Amreli Steels and Agha Steel Industries.

ASM, an Arif Habib Group company, is planning to expand capacity to a total of 700,000 tons a year from its current capacity of 220,000 tons.

Amreli Steels Limited, country’s leading steelmaker has announced plans to increase its annual production capacity of reinforcement bars to 750,000 tons a year within the next two years.

World's Largest Steel Producers. Source: Worldsteel.org 

The biggest drivers of soaring steel demand in Pakistan are rapidly growing large scale manufacturing and construction sectors.

Car sales shot up  23% while motorcycle sales soared by 20% in January 2018, according to industry data.

The cement sales, a good proxy for construction sector, rose 14.3% in the first 7 months of fiscal 2017-18.

Pakistan is the third fastest growing economy among the top 25 economies in terms of purchasing power parity.  Pakistan's economic growth is continuing to accelerate amid rising rising investments led by China-Pakistan Economic Corridor related infrastructure and energy related projects.  The IMF sees Pakistan economy growing at 5.6% while the World Bank forecasts it to grow by 5.5% in current fiscal year 2017-18 ending in June 2018, a full percentage point faster than the 4.5% average GDP growth for Emerging and Developing Economies (EMDEs) that include Argentina, Brazil, China, India, Nigeria and Russia among others. However, Pakistan economic growth continues to lag growth forecast for regional economies of India and Bangladesh. The report also calls attention to the expanding current account gap as a matter of concern that must be taken seriously by the government to avoid yet another return to the International Monetary Fund (IMF).

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Comments

Riaz Haq said…
Egyptian Billionaire Eyes Further #Pakistan #RealEstate Projects - Bloomberg #Islamabad #housing


https://www.bloomberg.com/news/articles/2018-03-06/egyptian-billionaire-eyes-further-pakistan-real-estate-projects

Naquib Sawiris is developing a $2b estate in Islamabad
Pakistan faces a housing shortage as its population expands

Egyptian billionaire Naguib Sawiris’s Ora Developers will next month start building a luxurious $2 billion housing estate on the outskirts of Islamabad and is eyeing further projects as it taps demand from overseas Pakistanis.

The ‘Eighteen Islamabad’ development will feature more than 1,000 homes, a golf course and a mall on 2.25 million square meters of land. It will take six years to complete, said Tarek Hamdy, chief executive officer of the development. Sawiris holds 60 percent in a joint venture with local firms Kohistan Builders and Developers and Saif Group, owned by Pakistan’s prominent Saifullah family.

Pakistan’s real estate sector has seen a boom in recent years as militant violence has receded. Economic growth in the nation of more than 200 million people has risen to around 5 percent as China finances more than $50 billion on infrastructure projects across the country. House prices have more than doubled since 2011, according to property website Zameen.com, and housing projects are mushrooming in cities such as Karachi, Lahore, Islamabad and Peshawar,

“The market isn’t saturated,” Hamdy said in an interview at his office next to Islamabad’s Margalla hills, adding that Sawiris’s firm is eyeing potential other projects that may be announced by the end of this year.

Prices for a three bedroom home on the estate start at 30.5 million rupees ($275,395) and about $400 million will be invested in the development in the first two years, Hamdy said.

‘Highest Quality’
“You can develop a project at very reasonable margins” between 10 to 40 percent, he said. “The highest quality still makes money.”

Sawiris is not new to Pakistan. He previously set up one of Pakistan’s first mobile phone companies, Mobilink, now the nation’s largest cellular firm by subscriber numbers.

Apart from private businessmen such as Malik Riaz Hussain who is building Pakistan’s largest development outside Karachi, the military’s housing business has sped up efforts to grab market share. Hamdy sees overseas Pakistanis particularly in the U.S., U.K. and Middle East as major buyers and is considering launching another housing project by the end of 2018.

A shortage of housing units will boost construction activity in Pakistan as the urban population grows by nearly 30 million by 2027, BMI Research said in a December report. Construction has been one of the largest recipients of foreign direct investment and in the first seven months of this fiscal year $380 million was invested in the sector, according to central bank data.

Riaz Haq said…
House prices in #Pakistan have more than doubled since 2011. Developers flocking to build more #housing. #economy #realestate #CPEC (via @BIAUS)

https://www.businessinsider.com.au/pakistan-house-price-boom-2011-2018-3

Property developers are flocking to Pakistan to take advantage of a housing shortage.
Steady economic growth and a booming population have underpinned a recent surge in house prices.
Pakistan property is booming.

Australia’s residential construction boom may have reached its peak, but it looks as if Pakistan is just getting started on something similar.

As a case in point, a $US2 billion housing construction project gets underway next month on the outskirts of Islamabad, Pakistan’s ninth-largest city.

According to a report by Bloomberg, the project will be run by the development company of Egyptian billionaire Naguib Sawiris, as developers look to cash in on a Pakistani housing boom.

The end-product will see the construction of more than 1,000 new houses, with prices starting at 30.5 million rupees (around $US275,000) for a three-bedroom home.

Pakistan’s economy has been on the rise in recent years, seeing annual GDP growth climb to 5% with a corresponding boom in real estate prices.

The growth trends have been driven by a material reduction in militant violence, and the flow-on effects from $US50 billion worth of Chinese investment in large infrastructure projects.

China has been actively strengthening ties with Pakistan, which it views as a key regional ally for its One Belt, One Road initiative.

Earlier this year, China stepped in to defend Pakistan after the US said it would cut aid to the country. Pakistan also conducts trade deals with China denominated in Chinese yuan.

Bloomberg cited the property website zameen.com, which said house prices in Pakistan have more than doubled since 2011 in the country of 200 million people.

Developers are flocking to the region attracted by the high margins still on offer for major real estate projects, with most developments attracting a return of between 10-40%.

And demand for housing is still strong, with steady stream of new projects in larger cities such as Karachi and Lahore.

The country’s housing shortage is most likely part of a longer-term trend, with Pakistan’s urban population expected to grow by around 30 million people by 2027.
Riaz Haq said…
Pakistan's capacity utilisation stands 91%
07 March 2018

https://www.cemnet.com/News/story/163604/pakistan-s-capacity-utilisation-stands-91-.html

The All Pakistan Cement Manufacturers Association (APCMA) reports that the domestic cement industry's capacity utilisation in the first eight months of this fiscal year (July 2017-Feb 2018) stood at 91 per cent of the total installed capacity of the sector.

In 8MFY17-18 the country's cement industry dispatched 31Mt of cement compared with dispatches of 26.3Mt in the corresponding period of last year, an increase of almost 18 per cent. In February 2018 alone, the total cement dispatches were 3.781Mt.

A spokesman of APCMA said that the cement industry is among the highest contributors to the national exchequer over the last few years. The contribution has increased to PKR117bn (US$1bn) in FY16-17 from PKR39bn in FY12-13. In FY16-17, the impact of duties and taxes was PKR3082/t or PKR154/bag. This incidence of high taxation negatively affects domestic consumption, said APCMA.

Presently, federal excise duty (FED) on cement is PKR1250/t, or PKR62.5/bag. The government should honour its promise and gradually reduce FED to zero to encourage cement off-take as this would support housing and infrastructural development in the country and create more employment, the association argued.

An APCMA spokesman, attributing domestic sector growth to government policies and its thrust on mega infrastructure projects, said that the local production could increase substantially if the smuggling of this commodity from Iranian border is checked.

Moreover, APCMA appealed that the customs duty on import of both clinker and cement should increase to a uniform rate of 35 per cent to support the local cement industry.

"Moreover, import of cement should not be allowed until Pakistan Standards and Quality Control Authority certifies the quality of cement being imported into the country," the association added.
Riaz Haq said…
#Pakistan #automobile sales jump 23% in first 8 months of FY 2017-18 to 170,354 cars.
#manufacturing https://www.dawn.com/news/1394949


Sales of locally assembled cars, light commercial vehicles, vans and jeeps exhibited a 23 per cent year-on-year growth to 170,354 units despite an increase in their prices.

According to figures released by Pakistan Automotive Manufacturers Association (Pama), sales in February stood at 22,654 units, up 15pc as 1Q of calendar year is generally a robust period for auto sales.

The change in import procedure, demand from online ride-hailing services and availability of auto finance at lower rates contributed to strong demand in outgoing month, said Rai Omar Basharat of Topline Securities.

Pak Suzuki Motor Company Ltd (PSMCL) sales rocketed 25pc year-on-year in February as price-conscious models Mehran, up 30pc year-on-year, WagonR 27pc, and Cultus 23pc all showed strong sales growth. The 8MFY18 sales were up 30pc year-on-year to 96,062 units.

Honda’s car sales clocked in at 4,501 units, up 20pc (plus 3pc month-on-month), while 8MFY18 sales grew by 38pc to 33,669 units due to success of recently revamped City and rebound in sales of BRV up 20pc month-on-month.

Toyota lagged behind with a decrease of 8pc/5pc, YoY/MoMm due to capacity constraints, though 8MFY18 units sales were up 2pc YoY.

Tractor sales grew by 14pc in February. Al-Ghazi Tractors outperformed, exhibiting a 40pc growth. During 8MFY18 tractor sales reached 44,627 units, up 40pc.

Total truck sales surged to 5,859 units in July-Feb 2017-18 from 4,677 units in same period last fiscal. Bus sales dropped to 420 units from 765 units.

Two- and three-wheeler sales for Feb 2018 went up by 18pc year-on-year due to rising disposable income of lower middle class, while 8MFY18 sales were up 19pc year-on-year to 1.258 million units.

Riaz Haq said…
#Pakistan #LSM growth speeds up 9.44% in January 2018 to highest in nearly a year. #steel #auto #cement #manufacturing

https://www.thenews.com.pk/print/293334-lsm-growth-speeds-up-9-44pc-in-january-to-highest-in-nearly-a-year

KARACHI: Large scale manufacturing (LSM) sector posted a gigantic 9.44 percent year-on-year growth in January on increasing cement and steel consumption and rising auto sales, official data showed on Friday.

Pakistan Bureau of Statistics (PBS) data showed that large-scale industries grew 13.58 percent in January over December 2017, while LSM growth was recorded at 6.33 percent during the first seven months (July-January) of the current fiscal year of 2017/18. LSM growth stood at 3.45 percent for July-January period of FY2017.

Analysts said the uptrend indicated that actual annual number would surpass the LSM growth target of 6.3 percent set for the current fiscal year.

“Services and agriculture sectors are not showing significant growth and so we can expect that LSM will play a primary role in increasing GDP size,” Ahsan Mehanti, chief executive officer at Arif Habib Commodities said. LSM accounts for 80 percent of manufacturing sector that contributes 13.5 percent share to GDP. Government is eying six percent economic growth for FY2018 as against 5.3 percent in FY2017, which was a decade high.

Mehanti said Chinese-pledged infrastructure developments are leaving positive impact on industrial activities. “So far $15 billion have been invested in CPEC (China-Pakistan Economic Corridor) projects and that investment reflects in rise in cement and steel consumption.”

In July-January, iron and steel production rose around 34 percent, followed by automobiles (21.23 percent) and non-metallic mineral products (12 percent). “The three heads have the highest cumulative growth impact,” Adnan Sheikh, assistant vice president at Pak Kuwait Investment Company said. “Non-metallic mineral production mainly grew on robust cement numbers.”

PBS data showed that cement production soared 23.5 percent year on year in January and 12.3 percent in the July-January period as Cherat Cement and Lucky Cement added their cement production capacities.

Sheikh, however, said LSM growth was hampered by seven percent lower fertiliser production due to plant closures amid high liquefied natural gas price and low urea retail price, along with delay in sugarcane crushing. “This led to nine percent lower sugar production, though it may recover in remaining months.”

PBS said the production in July-January 2017/18 as compared to the corresponding period a year earlier have been significantly increased in food, beverages and tobacco, coke and petroleum products, pharmaceuticals, nonmetallic mineral products, automobiles, iron and steel products, electronics and paper and board while decreased in fertilisers and leather products

All the three data collection authorities registered increase in production during the first seven months of FY2018. Provincial bureau of statistics, counting production of 65 products, recorded 4.84 percent growth in July-January.

Ministry of industries, measuring output trend of 36 items, recorded 6.62 percent increase in production in the July-January period, while Oil Companies Advisory Council, logging outputs of 11 oil and petroleum products, measured 9.45 percent rise in output.

The State Bank of Pakistan said the large-scale manufacturing sector has also been performing well, as it experienced a 10 percent growth during Q1FY2018 – the highest quarterly growth since FY2009.

“The performance was encouraging as, barring fertiliser, all segments contributed positively,” the central bank said in a report. “While cement and steel industries benefitted from the ongoing infrastructure and construction activities, production of white goods was aided by the rising domestic demand.”

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