Stakeholders of the construction industry have called on the government to initiate strict action against soaring prices of steel and cement, citing that the uptrend can dent growth of the sector.
In a statement on Tuesday, Association of Builders and Developers of Pakistan (ABAD) Chairman Fayyaz Ilyas said that stern action should be taken against the cement manufacturers who had formed a cartel to control the price of the input.
He stressed that continuous increase in prices of cement and steel bars would badly damage the construction industry and jeopardise progress on the Naya Pakistan Housing Scheme.
“Cement and steel manufacturers began raising prices of inputs as soon as construction activities took off following the announcement of incentives for the sector by Prime Minister Imran Khan last year,” he said.
He termed the increase in cement and steel prices a conspiracy against the construction industry.
Citing figures, Ilyas said that steel bars were sold for Rs110,000 per ton in November 2020, however, the price now soared to Rs178,500, which depicted an increase of more than Rs68,000.
On the other hand, cement manufacturers also hiked prices to Rs680 per 50kg bag, he said, adding that the two commodities constituted 60% of the total cost of a high-rise building while the proportion amounted to 30-40% for residential houses.
The ABAD chairman urged the government to take action against the two industries similar to how it moved against sugar mill owners.
Topline Research analyst Saad Ziker said that steel prices were on an upward trajectory due to a persistent increase in scrap prices and its additives in the international market.
Taurus Securities analyst Mustajab Ali Kazmi was of the view that cement demand in the north was driving up prices while companies also passed on some of the impact of increase in international coal prices to the consumers.
“The increase in prices can adversely affect construction activities,” admitted Topline Securities Head of Research Atif Zafar. “Prices of cement and steel are rising mainly due to increasing raw material costs.”
The jump in international prices for steel scrap and coal, coupled with rupee depreciation against the US dollar, pushed local prices up, he said.
Cedar Capital analyst Waqas Mustafa said that steel rebar prices increased in the domestic market at a time when scrap prices were declining in the international market.
“During the outgoing quarter, local rebar prices spiked over $100 per ton while scrap prices fell $70 per ton,” he said.
Published in The Express Tribune, September 1st, 2021.
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