Cement, steel bar prices surge

Published January 1, 2023
Steel bar prices hit the highest level of Rs235,000 per tonne in June 2022.—Reuters/File
Steel bar prices hit the highest level of Rs235,000 per tonne in June 2022.—Reuters/File

KARACHI: The prices of cement and steel — the two key building materials — have jumped 41 per cent and 16pc, respectively, pushing up the cost which resulted in a construction slowdown in the outgoing calendar 2022.

The 50-kg cement bag rate rose to Rs1,043 from Rs738 on Dec 30, 2021 while per tonne steel bar prices increased to Rs224,500-225,500 from Rs194,500-197,500 a year ago.

Steel bars, which hold a 40-45pc share in the total cost of construction of a high-rise project, hit an all-time high at Rs235,000 per tonne in June 2022.

The massive rise in cement and steel bars has jacked up the construction cost of hi-rises and housing projects. “This is a cost-push price increase in cement rather than demand-pull because of thin construction activities due to ongoing winter and post- floods situation,” a cement maker said, attributing the price hike to rising coal prices, power and diesel rates and general inflationary trend.

On plummeting cement exports, he said, shipments to Sri Lanka and Bangladesh had been on a downward trajectory.

Costly building materials hit construction activities in 2022

Sri Lanka is facing a foreign exchange crisis where its month-on-month demand had plunged to 200,000 tonnes from 600,000 tonnes. Besides, Bangladesh is meeting its demand from Vietnam instead of Pakistani cement.

The country’s overall cement exports plunged to 1.547m tonnes fetching $77m in 5MFY23 from 3.129m that earned $116m in the same period last fiscal year, showed Pakistan Bureau of Statistics data. However, exporters got a good price of $50 per tonne as compared to $36.

Local cement sales in December may fall by 13-17pc year-on-year to 3.4-3.5m tonnes and 9-13pc month-on-month amid an overall economic slowdown and higher construction costs.

According to a note of Topline Securities, the average daily sales in the North and South regions are hovering at 89,000 tonnes a day and 22,000 tonnes a day, respectively, due to seasonal factors on the onset of the winter and thin construction activities.

In 1HFY23, local sales may post a decline of 16-20pc year-on-year. Lower offtake in local cement despatches is on the back of rising construction costs and inflationary impact restricting the demand growth.

Cement retail prices in December averaged at Rs1,030 per 50kg bag in the North which is more or less similar to November. In the South, average prices stood at Rs1,064 per bag, with an increase of Rs10/bag from November, the Topline Securities said.

Some recovery in 2HFY23 is anticipated as flood rehabilitation programmes gain pace while falling coal prices could also provide support to the sector margins going ahead.

Published in Dawn, january 1st, 2023

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Smog hazard
Updated 05 Nov, 2024

Smog hazard

The catastrophe unfolding in Lahore is a product of authorities’ repeated failure to recognise environmental impact of rapid urbanisation.
Monetary policy
05 Nov, 2024

Monetary policy

IN an aggressive move, the State Bank on Monday reduced its key policy rate by a hefty 250bps to 15pc. This is the...
Cultural power
05 Nov, 2024

Cultural power

AS vital modes of communication, art and culture have the power to overcome social and international barriers....
Disregarding CCI
Updated 04 Nov, 2024

Disregarding CCI

The failure to regularly convene CCI meetings means that the process of democratic decision-making is falling apart.
Defeating TB
04 Nov, 2024

Defeating TB

CONSIDERING the fact that Pakistan has the fifth highest burden of tuberculosis in the world as per the World Health...
Ceasefire charade
Updated 04 Nov, 2024

Ceasefire charade

The US talks of peace, while simultaneously arming and funding their Israeli allies, are doomed to fail, and are little more than a charade.