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KARACHI: Steel, cement prices hit new peaks

March 24, 2008

KARACHI, March 23: Steel bars (sariya) price soared to an all-time high of Rs80,000 a ton on Saturday, marking an increase of Rs15,000 a ton in 12 days, while cement prices continue to show an upward trend.

The Pakistan Steel also increased the rates of its various products on Saturday. The base price of billet (a raw material for making steel bars) has surged to Rs51,500 from Rs45,500 a ton. The millers, who produce steel bars, have increased the rate by Rs7,000 to Rs61,000, which also includes Rs1,000 sales tax.

Cement makers, too, have been pushing up the rate of a 50kg cement bag by Rs5 to Rs10 every week. A 50kg cement bag, which was being sold for Rs260 to Rs265 a week back, will be retailed between Rs270 and Rs275 from the next week.

Surprised over the latest revision of steel price, the president of Karachi Iron and Steel Merchants Association, Shamoon Baqar Ali, said that the Pakistan Steel increased the rate on Saturday though it remained closed on weekends. Galvanized iron coil, which was being sold for Rs65,400 a ton till recently, price has been fixed at Rs68,100 a ton now.

He said that the caretaker government did not take any action to check steel prices, which also affected the sale of steel bars. He recalled that last year steel bar price was Rs48,000 a ton. Now, many builders who were planning to start a new project suspended their future buying, he added.

According to him, the only way to reduce the prices of steel products is to cut import duty on raw material (used in making of iron and steel products) from 20 per cent to 10 per cent in the budget besides reducing the sales tax from 17.5 per cent to 15 per cent.

“The government should also check the Pakistan Steel who has been playing havoc with the prices for the last few months,” Mr Shamoon remarked.

The Karachi Cement Dealers Action Committee president, Wali Bhai Patel, said that after the Saturday increase of Rs5 on a 50kg bag by the maker of Falcon Cement, the product would be retailed between Rs270 to Rs275 from the next week (depending on the profit margin of retailers) as compared to the last week rate of Rs260 to Rs265. A 50kg bag of Lucky Cement will be sold at Rs260 instead of Rs255. DG Khan Cement will be available in retail market for Rs265 as compared to the last week rate of Rs255 to Rs260.

He said the cement makers in Sindh had been increasing the rates every week though they had no justification for that especially when there was no cement shortage in the country.

He said the maker of Falcon Cement, a foreign company, had always taken the lead in pushing up the rates while others followed the suit. “The new government should initiate an enquiry of persistent increase in cement prices by the producers,” he added.

The Association of Builders and Developers chairman, Babar Mirza Chughtai, said the builders, who had launched projects six months back to complete their construction within three to four years, were taken aback with the escalating prices of cement and steel bars that already had hit the ceilings and they were now looking for ways to maintain the production cost.