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Steel bar prices up to Rs65,000

March 13, 2008

KARACHI, March 12 Prices of steel bars surged to Rs65,000 per ton on Wednesday as compared to Rs53,000 per ton two months back.

Structure steel prices hovered between Rs65,000 and Rs67,000 per ton.

According to a steel merchant, per ton price of steel bars was Rs48,000 a year back. However, builders and developers claim that last year steel bar prices ranged between Rs30,000 and Rs35,000 per ton.

Karachi Iron and Steel Merchants Association president Shamoon Baqar Ali told Dawn that the sale of steel bars had been falling after a persistent increase in its prices.

The builders and even consumers, who plan to start construction activities, think twice -- either to buy steel items right now or to wait for a price decline.

He, however, said the builders who have to meet deadlines for project completion are bound to purchase the item at higher prices.

However, he said builders can adjust the cost by using low quality items, and ultimately buyers would have to suffer in the end.

Mr Shamoon said that Pakistan Steel was actually running at 35 per cent capacity and it does not have an ample quantity of the raw material.

The state-owned unit is bent upon increasing rates. The government should take notice of the rising prices, he added.

He said that he had urged the Federal Board of Revenue (FBR) to cut the raw material prices (used in the making of iron and steel products) to 10 per cent from 20 per cent in the budget, besides cutting the sales tax to 15 per cent from 17.5 per cent so that prices of finished products at the domestic level could decline.

Association of Builders and

Developers chairman Babar Mirza Chughtai, quoting steel-bar rates at Rs65,000 per ton, said builders who were already under pressure to provide the completed units at old rates are now facing problems, with the rising prices cement and steel products.

He claimed that the builders have suspended their media campaigns for their new upcoming projects for the last 20 days which is evident from local newspapers and electronic media. The share of cement and steel products comes to about 70 per cent of the total project cost.

In the last one year, the price of steel bars and other material surged substantially, and it was very hard for the builders to provide a guarantee to keep the project cost under control, he said.

Babar said that the Pakistan Steel, instead of keeping its prices stable and under control, has been frequently increasing rates of raw material and finished products, thus encouraging the vested interest in the market to play havoc with prices.

“The relevant government departments are not doing their job to check prices of Pakistan Steel products. The state-owned unit should break the monopoly of private sector market players, but it seems that it had joined hands with them in pushing up rates,” he said.

The construction industry is heading for a serious crisis when builders and consumers will be seen fighting each other on rising prices of their projects, he said, adding builders do not have an option of increasing the project cost, like other private sector contractors.

Shaukat Hussain, a cement dealer in Gulshan-i-Iqbal, who also deals in steel products, said that steel-bar is now selling at Rs65,000 per ton as compared to Rs 63,000 per ton a day back. It was quoted at Rs42,000-43,000 per ton a month back.

He said only those customers who have a compulsion to complete their projects are purchasing steel bars while customers, who plan to start any construction project, have adopted a 'wait-and-see attitude'.

He added that whenever Pakistan Steel raises prices of its products, the markets players follow the suit.

According to Karachi Cement Dealers Association president Wali Bhai Patel cement demand is slowing down as construction activities are getting slower owing to rising prices of steel products.

He said cement makers have increased prices by Rs100 per ton from February 28 to March 5.

He said that the government departments are watching the situation from the sidelines.