KARACHI: The latest increase in steel bar prices by Rs7,000 to Rs139,500-142,500 per tonne has pushed up the cost of construction. The hike in steel bar prices — second since the last week of Dec 2020 when rates were raised by a similar amount — comes despite a global drop in iron and steel scrap prices.
Attributing the domestic price hike to extreme shortage and increase in cost of raw materials in the world market, a number of steel bar manufacturers have quoted new enhanced rates to the builders.
Amreli Steels Limited quoted the booking rates of its deformed and Xtreme bars at Rs141,500-142,500 per tonne. Agha Steel Industries revised its prices to Rs141,500-142,500 per tonne for its 10mm and 12-32mm bars. Naveena Steel Mills increased the prices to Rs140,500 for its 10mm bars and Rs139,500 for 12-32mm deformed grade-60 bars. Faizan Steel quoted the rate of Rs140,500 for 12-32mm bars and Rs141,500 for 10mm bars.
Talking to Dawn, former chairman of the Association of Builders and Developers Hassan Bakhshi alleged steel bar makers were acting as a cartel in a bid to ruin Prime Minister Imran Khan’s vision for low-cost housing. He said increase in rebar prices would also affect the Public Sector Development Programme.
The cost of construction on a high-rise project has risen by six to nine per cent keeping in view the Rs30,000 per tonne hike in steel bar prices from Nov 2020 to date, Mr Bakhshi said.
Steel bars hold 40-45pc share in total construction cost of a high-rise project. In housing projects, the cost of construction has also crawled up by 4-6pc as the share of steel bar ranges between 15-20pc in total expenditure.
According to the figures of Pakistan Bureau of Statistics (PBS), import of iron and steel scrap (raw materials for making steel bars) stood at 2.68 million tonnes costing $949m in July-Dec FY21 as compared to 2.062m tonnes valuing $806m in the same period last fiscal. The average per tonne price in first half of FY21 plunged to $354 per tonne from $391 per tonne in the same period in FY20 when steel bar makers claimed massive hike in scrap prices in the world market.
PM Khan has been holding weekly meetings of the National Coordination Committee on Housing, Construction and Development with the government departments and the private sector. In one of the meetings held in the last week of December, the PM, while taking notice of rising steel bar prices, had formed a committee to look into the rising steel bar prices and come up with a viable solution.
PM Khan had tasked the committee — comprising Minister for Industries Hammad Azhar, Chairman Federal Board of Revenue Jawed Ghani, chairman Naya Pakistan Housing Development Authority and the private sector stakeholders – to come up with a strategy to deal with rising prices of steel bars.
Published in Dawn, January 21st, 2021