The issue of quality standards is a question of very fundamental safety
ISLAMABAD: How can you be sure the house you live in is safe? Who guarantees that the apartments, homes, and office buildings you inhabit are constructed with durable, high-quality materials? Despite the significant sums spent on construction, many Pakistanis remain uncertain about the quality of the most fundamental building material: steel.
Shouldn’t this uncertainty concern us all?
These are the questions this article seeks to explore. What you may find startling is that a substantial portion of the 3.8 million tonnes of steel produced annually in Pakistan is of substandard quality. This revelation is not just a matter of economic concern but a pressing public safety issue.
The steel industry is a cornerstone of Pakistan’s economy, playing a vital role in construction, infrastructure development, and industrial growth. Over the past five years, the country’s annual demand for steel and iron has averaged 7.3 million tonnes, while domestic production has lagged at just 3.8 million tonnes. To bridge this gap, Pakistan has increasingly relied on imports, incurring substantial costs.
However, the challenges facing the steel industry extend beyond supply shortages. The production and distribution of substandard steel not only undermine legitimate, tax-paying businesses but also pose a grave risk to public safety. This article delves into the roots of this crisis, the regulatory failures that perpetuate it, and the urgent steps needed to address it.
A Brief Overview of Pakistan’s Steel Industry
Pakistan’s steel industry is one of the country’s most critical sectors, contributing significantly to industrial output and employing over 450,000 people. Over the years, the industry has grown substantially. As of 2019, it comprises approximately 600 mills—both large and small—with a combined production capacity of 3.3 million tonnes, accounting for 0.18% of global steel production.
The organized sector is dominated by 20 major players, including Amreli, Agha, Mughal, Frontier Foundry Steel, Razaque, Bilal, and Aitamad Steels. These companies collectively hold 80% of the market share and generated PKR 150 billion in revenue during the fiscal year 2020.
Despite this growth, the industry is plagued by systemic issues, chief among them the rampant production and sale of substandard steel.
A Ticking Time Bomb
The production and distribution of substandard steel have become pervasive, with little to no oversight from regulatory authorities. Legitimate steel producers have repeatedly raised alarms, urging the Pakistan Standards and Quality Control Authority (PSQCA) to enforce existing standards and curb the proliferation of low-quality steel.
Despite clear regulations, the market is flooded with substandard steel, creating a dangerous environment for consumers and a distorted competitive landscape for businesses. The price disparity between compliant and substandard steel bars has placed legitimate producers at a severe disadvantage, discouraging investment and stifling the industry’s growth.
Steel is included in the PSQCA’s Mandatory List, meaning it must meet specific quality standards. Section 14 of the PSQCA Act (1996) empowers the federal government to prohibit the manufacture, storage, and sale of non-compliant products. Additionally, Section 22 of the Act stipulates strict penalties, including imprisonment and fines, for violators.
However, enforcement remains woefully inadequate.
Presently the market is flooded with substandard steel materials and there is no check on production and sale of substandard steel. The dilemma is rules and standards are already there but unfortunately they are not implemented/ enforced, providing perfect ground for the culprits that are putting the lives of various people at stake.
There is blatant violation of standards countrywide that is not only creating national risk for the future generations but it is also creating unfair competition within the steel sector because of significant price difference between substandard and quality compliant bars. As a result, the documented and quality compliant sector is at great disadvantage and discouraging further investments and hurdles in achieving economies of scale.
Standards vs. Reality
According to Pakistan Standards (PS) specification PS: 1879-2018R, steel bars must be rolled from properly identified heats of mold-cast or strand-cast steel, using processes such as the Electric Arc Furnace or Induction Furnace coupled with a Ladle Refining Furnace. The use of re-rolling scrap from the shipbreaking industry is explicitly prohibited.
As per the standard the bars shall be produced by following the proper process and meet the tensile requirements. Whereas the domestic market is loaded with the substandard bars manufactured through direct rolling of re-rollable scrap and shipbreaking material/ship plates and fail to meet the strength and elongation tests when measured against the standard.
Yet, the reality is starkly different. A significant portion of the steel produced in Pakistan is manufactured through the direct rolling of re-rollable scrap and shipbreaking materials, bypassing the required refining processes. These substandard bars fail to meet tensile strength and elongation tests, rendering them unfit for construction purposes.
This practice is particularly alarming given Pakistan’s vulnerability to earthquakes. The widespread use of low-quality steel in infrastructure—homes, bridges, dams, and commercial buildings—poses a catastrophic risk to public safety. The menace of production and sale of substandard steel is especially worrisome for Pakistan as it is prone to natural disasters because it comes under a high seismic zone. The usage of low-quality steel into the nation’s infrastructure (homes, buildings, bridges, dams and other infrastructures) is creating permanent risk for future generations because the substandard steel cannot tolerate the shocks of high magnitude earthquakes.
Lessons from India
In contrast to Pakistan’s lax enforcement, India has taken a proactive stance on steel quality. The Indian government has banned the use of shipbreaking steel plates for TMT bar production, citing concerns over inconsistent quality and insufficient data. A committee formed by India’s Steel Ministry recommended that ship plates be used only for non-structural applications, such as packaging materials or small-sized bars.
The committee emphasized the need for comprehensive testing and long-term durability studies before such materials could be deemed safe for structural use. This cautious approach underscores the importance of stringent quality control in safeguarding public infrastructure.
The Domestic Industry’s Perspective
Many Pakistani steel manufacturers have invested heavily in technology and processes to comply with national standards. However, their efforts are undermined by unscrupulous producers who flout the law with impunity. These rogue manufacturers produce substandard bars directly from shipbreaking scrap and re-rollable scrap, bypassing the required refining processes.
The consequences are dire: substandard steel infiltrates the nation’s infrastructure, compromising its resilience to natural disasters. Moreover, these practices undercut legitimate businesses, eroding tax revenues and discouraging further investment in the sector.
Industry stakeholders have called for stricter enforcement of existing laws, including the suspension of operations for non-compliant manufacturers and the confiscation of substandard steel. They have also urged the government to launch public awareness campaigns to educate consumers about the dangers of using substandard materials.
Regulatory Failures and Recommendations
The PSQCA, tasked with ensuring compliance with national standards, has been criticized for its ineffectiveness. Despite clear legal provisions, the authority has failed to curb the production and sale of substandard steel.
To address these shortcomings, industry experts have proposed several measures:
Rationalize License Fees: Adjust licensing fees to make compliance feasible for all stakeholders.
Enhance Licensing Requirements: Mandate the availability of production and testing facilities as part of the licensing process.
Establish a Vigilance Committee: Create a committee comprising members from academia and the private sector to monitor enforcement efforts.
Amend the PSQCA Act: Clarify licensing requirements for foreign manufacturers and ensure they adhere to national standards.
The Construction Industry’s View
The construction sector, a major consumer of steel, has also voiced concerns. Former Chairman of the Association of Builders and Developers (ABAD), Hassan Bakhshi, acknowledged the lack of government oversight but noted that reputable builders often use high-quality steel, such as Grade 60, in high-rise projects.
However, he highlighted the challenges posed by price disparities, with compliant steel often costing 10-20% more than substandard alternatives. This price gap incentivizes the use of low-quality materials, particularly in smaller projects.
Farhan Javed, Group Director at IMARAT, emphasized the importance of quality assurance in construction. “Using substandard materials compromises not only the longevity of a building but also undermines investor confidence and tarnishes the industry’s reputation,” he said. IMARAT employs a rigorous 26-step process to ensure compliance with international standards, setting a benchmark for the industry.
A Call to Action
The crisis in Pakistan’s steel industry is a multifaceted problem with far-reaching implications. It demands urgent action from regulators, industry stakeholders, and policymakers. Strengthening enforcement, raising public awareness, and fostering a culture of compliance are essential steps toward safeguarding public safety and ensuring the industry’s sustainable growth.
As the Pakistan Association of Large Steel Producers (PALSP) noted in a recent letter to the Ministry of Science and Technology, “The enforcement of PSQCA standards is not just a regulatory issue—it is a matter of national security.”
The time to act is now. The stakes are too high to ignore.
Courtesy Profit
