LAHORE-The manufacturing industry has asked the government to allow the import of raw materials at reduced duties and taxes to enable them to compete with local vending and raw materials monopolies, and help keep the end products prices affordable for consumers.
Local recyclers of CRC steel, steel forgings and aluminum have increased prices significantly in the past few months, forcing the industries that use these raw materials to pass on the burden to the consumer.
According to details, Aluminum HD-2 prices went up to Rs 350/kg in March this year from Rs 233/kg back in April 2020, showing almost 50 per cent increase. The global prices of Aluminum HD-2 also witnessed an increase of 42.25 per cent, from $ 1526/T in Apr 2020 to $ 2171/T in Mar 2021, but it was much lower than the increase in the local market.
Similarly, the price of steel sheet (2.0mm) witnessed an increase of around 44.76 per cent in one year from Rs 105/kg in April 2020 to Rs 152/kg in March 2021. Though global prices of steel also increased in the same time period, from CNY 3517/T to CNY 4584/T, the increase was restricted to 30 per cent, which means that the rise in local prices was more than the global hike.
Shehzad Ahmed of Brother Engineering said that steel is heavily used in manufacturing but its prices are being increased locally every week that has 100 per cent impact on the output price.
“It is beyond understanding why local steel recyclers are frequently increasing prices because this is damaging the local industry,” said Shehzad.
In addition to steel and aluminum, the global prices of copper witnessed a whopping increase of 95.52 per cent from $ 2.12/lbs in April 2020 to $ 4.15/lbs on March 15th 2021. Similarly, prices of rubber increased from JPY 135.71/kg in Apr 2020 to JPY 272.74/kg in Mar 2021, showing an increase of 100 per cent in a year.
This cost pressure has already made the construction and intermediate product manufacturers like cement, steel, aluminum, copper and rubber to pass on this increase in raw materials both globally and locally onto local developers, vendors and Original Equipment Manufacturers (OEMs) on a weekly basis. This situation has annulled the benefit of Pakistani rupee’s appreciation against the US dollar, and the manufacturers are now turning to alternate import sources. This phenomenon is also hurting white goods makers, tractors and even Chinese motorcycle manufacturers, who have attained over 90 per cent localisation.
M. Arif of Precision Manufacturing has said that the OEMs are under immense pressure how to manage their sales because the buying power of people has been affected badly. He added that the prices of rubber, steel, and aluminum are related to each other and affect the whole chain of manufacturing, thus making it really difficult for vendors to stay in the business. “The future of manufacturing seems bleak due to this incessant increase in the prices of raw material,” he said. OEMs are struggling how to continue with manufacturing amid this situation where raw materials are becoming expensive day by day, he added.