ISLAMABAD, April 12: An unprecedented rise in the prices of cement, steel and other construction material is not only threatening growth in the housing and construction industry, but is also likely to increase unemployment in the country.

Steel prices have gone up by 59 per cent over the past seven months. The price of grade 60 steel, which was Rs50,000 per ton in September, has gone up to Rs84,000 per ton. Similarly, the price of grade 40 steel, which was available at Rs4,125 per ton, has gone up to 5,200 per ton.

Industry sources claim that decisions made by the Engineering Development Board (EDB) asking the Pakistan Steel to index its prices to ‘international landed prices’ is putting pressure on the prices of steel.

“An impression is being created that the prices of the Pakistan Steel are lower compared to prices in international market. This is not true,” a source said. He also rejected an impression that high international prices were because of heavy consumption in China and mergers among big steel players.

He said the government should take note of the increase in steel prices as it had started harming construction and housing activities.

The Pakistan Steel announced on Wednesday an increase in the prices of its products, including billet, bloom, galvanised steel and hot- and cold-rolled steel.

It announced an increase of Rs1,000 per ton for billets and bloom, Rs3500 per ton for hot and cold-rolled products and Rs3,500 to Rs4,500 per ton for galvanised products.

About a month ago, the PSM had announced an increase of Rs2,500 per ton in the rates of billets of all sizes followed by a hike of Rs5000-7500 per ton in the hot and cold-rolled products and Rs2000 per ton increase in the prices of galvanised steel.

In the same seven-month period (Sept 2007- March 2008), prices of cement went up by 26.1 per cent, prices of high speed diesel by 14.3 per cent and gasoline by 18 per cent.

The increase in cement prices is attributed to exports by the cement industry. This trend is likely to grow further. Data given by the industry shows that export and local sale of cement had increased by 39.68 per cent.

In March alone the local sale of cement went up to 2.2 million tons – a rise of 20 per cent. Exports during this period hit 0.89 million tons, registering an increase of 140 per cent.

From July to March the total sale of cement has gone up to 0.219 million tons, showing an increase of 25 per cent as compared to the same period last year. An increase in the export of cement to India, Afghanistan and Middle East countries is expected this year, creating further pressure on cement prices in the country.

Officials concerned concede that an unusual hike in the prices of construction material is threatening the job market in the industry. Daily wage workers are suffering because not only the construction activity in the private sector is slowing down but large-scale development projects in the public sector are also suffering.