KARACHI: The ex-factory price of steel bars has crossed the Rs250,000 per tonne threshold for the first time amid claims by stakeholders regarding thin demand for steel products on account of a slowdown in construction activities.

Amreli Steels Limited (ASL) has quoted a new price of Rs255,000 per tonne (9.5-10mm size) and Rs253,000 (16mm and above), showing a jump of Rs10,000 in the booking rates effective from Saturday.

Mughal Steel has also announced a price jump of Rs10,000 per tonne from Jan 20. The 10-12mm and 16-25mm steel bar prices of Faizan Steel are Rs252,500 and Rs250,500, respectively.

Naveena Steel Mills and Agha Steel Industries have issued new prices of Rs251,000 per tonne for 16-32mm and Rs253,000 for 10-12mm.

Costly materials slow down construction activities

After a jump of Rs10,000 per tonne, the new rate of steel bars produced by Union Steel Industries is Rs252,000 (12mm and above) and Rs254,000 (9.5-10mm).

The manufacturers have attributed the price hike to unexpected shortages of raw materials, the non-opening of letters of credit, rising cost of production and unfavourable economic conditions.

A steel bar dealer said that some manufacturers stopped taking fresh bookings due to material shortages and pending orders, which means more price shocks are on the cards. He added that the manufacturers are not releasing the steel bars in the market, citing multiple reasons.

Sufiyan Adhia, a former office-bearer of the Association of Builders and Developers (ABAD), said the construction cost has swelled by 60pc in the last year and would rise further given uncontrollable price increases in construction materials especially steel bars and cement.

He said the construction cost of the hi-rise project is now over Rs6,000 per square ft which was Rs3,000 around one and a half years back.

He claimed that the steel bar and cement makers act like a cartel to push up the rates in absence of any check by the government.

Mr Sufiyan said steel bar makers are creating an artificial crisis by hoarding steel bars aimed at taking up the price up to Rs300,000 per tonne besides holding stocks of steel scraps for at least two months.

He urged the government to allow the import of steel bars from Iran which would be much lesser than the rates of local manufacturers who are producing costly steel bars from iron and steel scrap.

All Pakistan Tiles and Sanitary Merchants Association Chairman Mohammad Amin Lasania said the price of locally produced tiles and imported tiles have risen by 25-30pc and 40-50pc, respectively, while the price of imported sanitary items has doubled followed by 35-40pc rise in the rates of locally produced items in the last one year.

Sales of tiles and sanitary items have plunged by at least 50pc due to rising prices, while construction cost has surged by 60pc in the same period, he said.

The situation is also getting alarming for the builders as they would be unable to hand over new flats in view rising cost of construction, while high food prices and utility charges are also making people reluctant towards purchasing new apartments and houses and even for the renovation of their houses. This would directly hit the manufacturers of at least 40 construction items, Amin said.

The local cement sales dipped by 17pc to 20m tonnes in 6MFY23 from 24m tonnes, while the price of an average 50kg cement bag rose to Rs1,042 from Rs738 a year back.

As per data of Sensitive Price Indicator (SPI) ending January 19, 2023, the wage rate of painter, mason (Raj), lab orer, plumber and electrician has increased by 11.17pc, 12pc. 14.51pc, 12.58pc and 13.56pc from the week ending January 20, 2022.

Published in Dawn, January 22nd, 2023