KARACHI: The price of steel bar has crossed Rs200,000 per tonne due to severe supply chain disruptions, shortage, a sharp increase in the cost of inputs and utilities as attributed by the manufacturers in their messages to the construction sector stakeholders.

For example, Amreli Steels Ltd (ASL) has quoted the new price of Rs201,000 per tonne for 9.5/10mm and 12mm and Rs199,000 per tonne for 16mm and above.

Faizan Steel has issued the price for 10mm-12mm at Rs200,500 per tonne and Rs198,500 per tonne for 16mm-25mm.

The price of steel bar in November 2020 was Rs110,000-113,000 per tonne, which has almost doubled in a little over one year pushing up the construction cost besides sending many small players out of business.

Govt asked to give subsidy on construction materials

In the third week of January, Pakistan Association of Large Steel Producers (PALSP) Secretary-General Wajid Bukhari said due to weather-related sluggish demand the steel bar prices in the north were slashed to Rs189,000 per tonne from Rs194,000 for a brief period.

On Monday, Mr Bukhari said the prices of primary raw material of the steel industry (scrap) have increased by $120 per tonne to $670 in less than a week which would translate into a price hike of Rs20,000 per tonne in the domestic market.

This situation would be unfavourable for the steel as well as the construction industry as any further increase in prices is likely to suppress the steel demand, he feared.

The Russian war against Ukraine followed by sanctions on Moscow has pushed up international steel scrap prices. Both the countries are the biggest producers and suppliers of steel and have combined export of five million tonnes of scrap annually.

The bullish trend in commodities prices especially steel scrap, crude oil and energy is making the situation more difficult for the local steel industry, he said.

He feared that the war and supply chain disruptions could have dire consequences on the steel sector as well as on prices. The cost of input is increasing leaving manufacturers with no choice except to pass on the impact to the end consumer.

Karachi Iron and Steel Merchants Association (KISMA) President Shamoon Baqar Ali said the increase in steel and cement prices would further slow down the construction activities which were already much evident from declining cement sales in the 7MFY22.

Giving an example, he said a builder, who is now taking booking of a flat, would face difficulty in handing over its possession in the next two years due to massive jump in construction cost.

He urged the government to give some kind of subsidy which could help reduce the prices of construction materials.According to data of Pakistan Bureau of Statistics (PBS), import of iron and steel scrap in 7MFY22 plunged by 21pc in quantity to 2.456m tonnes from 3.120m tonnes while the value soared by 30pc to $1.442 billion from $1.110bn. The average per tonne swelled to $587 from $355 in 7MFY21.

Published in Dawn, March 8th, 2022