ISLAMABAD, Tuesday, July 28, 2026: Pakistan could revive its struggling steel industry through consistent industrial policies, technological modernisation and competitive energy tariffs, with industry experts calling China’s development model a practical roadmap for sustainable growth.
Pakistan’s steel sector continues to operate below its potential despite having substantial installed manufacturing capacity. Industry representatives say weak domestic demand, high electricity costs and inconsistent policies have forced many producers to operate at only 40% to 50% of capacity.
According to figures cited from the World Steel Association, Pakistan’s per capita steel consumption stands at about 35 kilograms, while the country contributes only 0.27% to global steel production.
China, by comparison, accounts for around 53% of global steel output and recorded per capita steel consumption of 691 kilograms in 2021.
Long-Term Planning Drove China’s Steel Growth
Speaking to Wealth Pakistan, Pakistan Association of Large Steel Producers Secretary General Syed Wajid Bukhari said steel was central to industrial development, economic self-reliance and international competitiveness.
He attributed China’s rise as the world’s largest steel producer to long-term planning, policy continuity and reforms guided by the country’s National Development and Reform Commission.
China began phasing out inefficient steel production capacity under an industrial policy introduced in 2005 while continuing to invest in modern plants, infrastructure development and export competitiveness.
Bukhari said China now has steel production capacity of approximately one billion tonnes and exports nearly 120 million tonnes annually.
Pakistan, meanwhile, has lost almost half of its steel production capacity because of weak planning and unfavourable operating conditions, he added.
China’s steel industry also benefited from strong domestic demand generated by large-scale construction and infrastructure projects, alongside government facilitation, competition among producers and export incentives.
Beijing has more recently reduced incentives for low-value steel exports to encourage manufacturers to produce higher-value and environmentally sustainable products.
Pakistani Steelmakers Operating Below Capacity
Bukhari said major producers in Pakistan’s long steel segment had installed modern technology and expanded capacity during the past decade.
However, declining construction activity and inconsistent government support have prevented the sector from using its full production potential.
FF Steel Chief Executive Officer Zarak Khan said Pakistan’s main problem was not a shortage of technology or installed capacity but an unfavourable business environment and subdued domestic demand.
Electricity accounts for approximately 23% to 25% of steel production costs in Pakistan, compared with around 12% in China, significantly weakening the competitiveness of local manufacturers, he said.
Khan argued that establishing new primary steel plants would be difficult to justify under prevailing exchange rates and international equipment prices because much of Pakistan’s existing capacity remains underutilised.
The slowdown in construction activity since 2022, reduced Public Sector Development Programme spending and the completion of several major China-Pakistan Economic Corridor projects have contributed to lower steel consumption.
Technology Transfer Favoured Over New Steel Plants
Khan said future collaboration with Chinese companies should focus on equipment modernisation, technology transfer, research and development, workforce training and the production of specialised steel products rather than building new primary steelmaking facilities.
He also called for better coordination between Pakistan’s industrial and energy policies.
China has used its steel sector as a strategic consumer of electricity by offering competitive tariffs during periods of surplus generation, he said.
Pakistan could adopt a similar approach during winter, when electricity demand falls and a significant portion of power generation capacity remains unused.
Khan proposed a targeted winter electricity tariff for export-oriented steel production, with concessions linked to verified export earnings.
Such a policy could allow Pakistan to use surplus electricity to manufacture value-added steel products for overseas markets, increasing industrial output, creating jobs and generating foreign exchange.
Industry representatives believe policy continuity, lower energy costs, stronger infrastructure spending and targeted cooperation with China could help Pakistan restore steel production and strengthen its position in regional manufacturing value chains.
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