How the Local Steel Industry Supports Pakistan’s Automotive Sector
Steel is a central part of what industry experts see as the growth of industries. An important source of support for the growing automotive sector in the nation is the Pakistan local steel sector. Steel is the fundamental material in the manufacturing of car bodies, and also of the manufacture of engine components for every stage of the automobile manufacturing.
By controlling costs, while creating employment but simultaneously developing durable industrial expansion enhancing product quality, the local steel industry in Pakistan affects automobile manufacturing.
Operations of the auto industry demand that one steel upon the other depend upon the other
Steel is one of the vehicles’ main raw materials, used by manufacturers. Steel can be found in almost any type of vehicle—passenger cars, motorcycles, trucks and buses.
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- Chassis and frames
- Body panels
- Suspension parts
- Engine blocks
- Fuel tanks
World Steel Association reports that steel represents nearly sixty percent of everything that makes up an ordinary car. The steel and automotive industries show a powerful relationship at both international and Pakistani levels.
Overview of Pakistan’s Steel Industry
The steel industry in Pakistan experienced a significant rapid advancement during the past two decades. The steel industry consists of Pakistan Steel Mills as its large-scale operations and private companies, including Amreli Steels, Mughal Steel, and International Steels Limited.
| Parameter | Value |
|---|---|
| Annual Crude Steel Production (2023) | ~3.7 million metric tons |
| Domestic Steel Demand | ~7.1 million metric tons |
| Auto Industry Steel Consumption | ~15-18% of total demand |
| Imports | ~40-50% of high-grade steel is still imported |
Automotive production benefits from local steel industry activities
1. Cost Reduction Through Local Sourcing
- Production costs reduce for automakers who obtain their steel from local sources.
- Import duties and tariffs
- Transportation and logistics costs
- Foreign exchange fluctuation risks
- The end-user can afford vehicles more easily, while Pakistan-made cars demonstrate improved competitiveness because of these savings.
2. Faster supply chains and just-in-time manufacturing
Local steel suppliers enable:
- Shorter lead times
- Rapid inventory replenishment
- Greater supply chain resilience
- Japanese vehicle manufacturers Suzuki Toyota and Honda benefit substantially from their just-in-time (JIT) production method because of this benefit.
3. Customization and Technical Support
- Pakistani steel mills participate in developing special steel solutions specifically for automakers.
- The facility generates custom instrument measurements to serve particular automotive components.
- Corrosion-resistant steel for body panels
- Heat-treated steel for engine components
- ISL produces automotive-grade steel products, including cold-rolled and galvanized steel at international levels.
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Employment and Industrial Ecosystem Development
1. Direct and Indirect Job Creation
The steel-auto ecosystem supports a labor force of thousands of people through:
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- Manufacturing
- Welding and fabrication
- Engineering and design
- Transport and logistics
2. Skill Development
- Steel companies, through their programs, have achieved these outcomes:
- The company provides vocational education leading to qualifications as a machine operator, along with welder certification.
- Technical internships for engineering students
- The organization joins forces with regional educational institutions such as universities and technical institutes.
Steel Grades Used in the Automotive Sector
Common Steel Types and Their Uses in Cars:
| Steel Grade | Application |
|---|---|
| Mild Steel | Body panels, brackets |
| High-Strength Low Alloy (HSLA) | Chassis, suspension |
| Galvanized Steel | Exterior panels (rust resistance) |
| Advanced High Strength Steel (AHSS) | Crumple zones, bumpers |
| Boron Steel | Reinforced door beams, safety parts |
Role in Localizing Auto Parts Production
Local steel production has replaced previous imports of auto parts, helping the industry through:
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- Local industries produce fuel tanks and bumpers as well as panels.
- The production process of CKD (Completely Knocked Down) units becomes more economical.
- The Automotive Development Policy (ADP) established targets for localization that our team needs to meet.
- The Engineering Development Board (EDB) reports that localized manufacturing rates have seen substantial improvements in recent five years.
1. Lower Carbon Footprint
Locally produced steel:
- Requires less fuel for transportation
- Encourages recycling of scrap metal
- The steel plants in Pakistan adhere to more stringent regulations regarding emissions.
2. Electric Arc Furnaces (EAFs) constitute steel production technology.
The steel production facilities of Mughal Steel and other modern Pakistani plants depend on Electric Arc Furnaces (EAFs) because they enable:
- Reduce greenhouse gas emissions
- They provide higher efficiency when compared to conventional blast furnaces.
- The steel industry supports the circular economy through steel scrap recycling.
Challenges Faced by the Local Steel Industry
The Pakistan steel industry continues operations but struggles with three key challenges:
1. High Energy Costs
Industrial energy rates rank among the highest prices in South Asia.
2. Import of Specialized Steel
The production of advanced automotive steel depends on importing from Japanese and Chinese, and South Korean manufacturers.
3. Currency Volatility
The depreciation of the Pakistani rupee leads to higher costs for raw materials imported into the country.
4. Regulatory Inconsistencies
Long-term planning bears uncertainty when policies change frequently.
Government Support and Policies
Key Policies Supporting the Sector:
- The Auto Industry Development and Export Policy (2021-2026) is designed to achieve both domestic development and exporting success.
- This plan aims to enhance localization capabilities while increasing export levels
Global Comparisons: What Can Pakistan Learn?
| Country | Steel Use in the Auto Sector | Key Advantage |
|---|---|---|
| Japan | ~80% | Technological precision and local innovation |
| India | ~70% | Strong policy support for the steel-auto link |
| China | ~85% | Vertical integration of steel and car manufacturing |
| Pakistan | ~50-60% | Growing but needs support in R&D and quality |
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Conclusion:
Strategic investment in the connection between the steel and automotive industries will create opportunities for economic development. Economic development in Pakistan depends on the active partnership between its steel production and automobile operational sectors. Investments in quality infrastructure and policies, along with capacity building, will enable Pakistan to produce better results for its economy.
Local automakers rely on steel manufacturing companies, including Kamran Steel, to receive high-quality, durable steel for their operations. Through its commitment to innovation and reliability, Kamran Steel maintains its support of Pakistan’s growing automotive sector, which builds its foundation with successive reinforced beams.
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