Pakistani steelmaker Agha Steel Industries Limited is planning to increase rebar production capacity and raise around PKR3.6-5bn ($21-30mn) in an initial share sale (IPO) as the construction industry is likely to boost demand for finished steel products. The company is hopeful that the government’s real estate package will change the country’s situation in equity markets.
In an exclusive conversation with Davis Index, CEO Hussain Agha said they are quite confident about expanding their capacity wich will result in an increase in ferrous scrap imports in Pakistan in the coming days. The steelmaker plans to almost triple its construction steel capacity which includes grey steel bars used in building structures like homes and dams. This will increase Agha Steel’s finished long steel capacity to 650,000mt per year from 250,000mt. Two years ago, it had doubled its billet capacity to 450,000mt.
With strengthening of trade relationship with China and increase in investment-led infrastructure projects, the Pakistan steel sector is expected to rebound from successive currency depreciation, COVID-19 outbreak and illegal trade activities. This is encouraging a few other steelmakers to start expansion projects, said a trader.
Infra projects in the pipeline
There are several China-financed projects in the country. Agha Steel is looking to supply raw materials for many of these. It also targets to supply steel for a coal-fired power plant and five upcoming dam projects. The project of Mohmad dam construction alone is likely to generate PKR10bn in revenue for the company. Naya Pakistan Housing program in Pakistan is all set to break ground for 100,000 houses in the coming months.
According to the Pakistan Bureau of Statistics (PBS), large scale manufacturing (LSM) of long steel production (rebars, billets and ingots) fell 18pc while flat steel manufacturing (sheets, plates and coils) fell 17pc during FY20 compared to same period last year.
($1 = PKR 166.35)