Construction cost rises as steel bars prices climb
KARACHI: Cost of construction has risen by Rs300 per square foot in the last four months, following a rise in steel bar prices (sarya), cement, tiles, sanitary wares etc.
Razaque Steel Ltd’s Irshad Mowjee told Dawn that the price of high quality steel bar - made from steel billets - now costs Rs95,000-96,000 per tonne, up by Rs7,000-8,000 per tonne, during the last one and a half months, due to devaluation of the rupee against the dollar and rising steel prices internationally.
Another quality of steel bars, made of scrap, is being sold price at Rs88,000 per tonne, showing a jump of Rs5,000-6,000 per tonne.
He said that imported scrap price went up by $48 per tonne to $385 per tonne in January from $337 per tonnes in November 2017.
The manufacturers have not been able to pass on this increase to the consumers as it translates to Rs5,520 per tonne while 10 per cent devaluation in the last three to four months adds to Rs3,850 per tonne.
After adding working capital, financing, wastage, etc, it translates to nearly Rs11,000 per tonne. Mowjee said that the market cannot absorb such a high price without passing on it impact.
Offering a different view, dealers in Sarya Market have quoted branded steel bar price at Rs97,000 per tonne, as against to Rs92,000-93,000 per tonne, while another quality costs Rs89,000-90,000, as against Rs80,000-81,000 per tonne.
Some dealers are charging Rs100,000 for higher quality steel bars, as against Rs92,000 per tonne, while another quality is being sold at Rs93,000-94,000 currently, which was available at Rs88,000 per tonne.
Builders mainly use high quality steel bars of certain branded companies, while contractors making houses use a different quality.
The price of hot-rolled products in the world market has risen to $600 per tone, from $450 per tonne in the last three to four months, while that of cold-rolled products has swelled to $660 per tonne from $450 per tonne, the dealers said.
According to figures of Pakistan Bureau of Statistics (PBS), the import of iron and steel scrap rose to 3.56 million tones, costing $1bn during July-February 2017-18, as compared to 2.51m tonnes valuing at $650mn.
Iron and steel imports also surged to 2.33m tonnes ($1.56bn) in July-February 2017-18 from 2.07m tonnes ($1.32bn) in corresponding period last fiscal.
Chairman Association of Builders and Developers (Abad) Arif Yousuf Jeewa said that steel bar prices are now quoted at Rs94,000-96,000 per tonne, which was Rs88,000 one and a half months ago and Rs72,000 four months ago.
The increase in steel bar prices in the last four months translates into a jump of Rs150/sq-ft in terms of construction cost, he said adding that local tile makers had also raised prices to Rs1,400 per meter from Rs900 per meter despite the fact that regulatory duty was imposed on imported tiles.
“Overall rise in construction cost in the last four months on account of rising steel bar, tile, sanitary, cement etc comes to Rs 300/sq-ft,” he claimed.
Jeewa said that increase in material prices used in construction activities has directly hit the end users.
Published in Dawn, April 18th, 2018