KARACHI, Feb 22: Lifting of steel bars (sariya) by builders, contractors and general public fell sharply during the last fortnight owing to Rs8,000 per ton jump in its price to Rs44,000 against Rs36,000 three months back.

Presently, only those builders and contractors who have to meet deadlines of their projects are buying steel bars, while others are waiting for reduction in its prices before initiating construction work of new projects.

The sharp increase in steel bar prices by Rs8,000 per ton and cement prices to Rs260 from Rs220 per 50-kg bag – two main building materials - has made it very difficult for those who have just started construction of their roof, house or engaged in renovation activities to complete it within their estimated budgets.

However, builders and contractors know how to recover from consumers the increase in production cost.

Senior Vice-President Karachi Iron and Steel Merchants Association (KISMA) Shamoon Baqar Ali said that about 70 per cent buyers had suspended purchasing of steel bars during the last fortnight and were waiting for easing of prices to resume construction activities.

“Our sales of steel bars have declined by over 50 per cent in the last 15 days,” he said attributing the increase in steel bar rates to high world prices of billets, cobble plates and steel plates - the main raw materials in production of steel bars.

He pointed out that only those who had to meet their deadline as their projects were at advanced stage were picking steel bars from the market.

“Steel bars contribute 20-25 per cent share in the total construction cost of an average 200-yard house (ground plus one) which requires an average five tons of steel bars for which the consumers are now paying Rs220,000 as compared to Rs180,000 three months back,” he elaborated.

The entire construction cost for ground floor of a 200-yard house now ranges between Rs1.2 to 1.5 million depending on the accessories and material quality including Rs225,000-250,000 for steel bars.

He urges the government to remove an anomaly that requires commercial importers to pay six per cent withholding tax at import stage while industrial importers are exempted from it.

Chairman All Pakistan Contractors Association (APCA) Engineer Ahmed Ghazal Usmani said only those contractors were buying steel bars who had to meet completion dates otherwise those who planned to start construction of their projects in near future were waiting for the price fall.

However, he added, in some private and public projects there are escalation clauses which contractors can claim but a majority of projects do not have this facility and contractors find difficulties in maintaining a normal pace of construction whenever steel bar and cement prices increase.He urged the government to lower the taxes and duties on the import of steel related building materials which would automatically push steel bar prices downward in the local market.

Chairman Association of Builders and Developers (ABAD) Hafizur Rahman Butt said builders had suspended bulk buying of steel bars and cement. “Many builders have been purchasing cement and steel bars keeping in view short-term requirements instead of placing big orders in advance,” he pointed out.

He said many builders had decided to delay the start of construction work on newly-launched projects till prices come down.