Steel Price Hits New Peak Despite Demand Slump

Ex-factory prices of steel bars crossed the threshold of Rs 250,000 per tonne for the first time, as stakeholders claimed weaker demand for steel products due to slowdown in construction activities.

After a hike of Rs 10,000 per tonne, the new price for rebar produced by Union Steel Industries is Rs 252,000 (12 mm and above) and Rs 254,000 (9.5-10 mm).

Manufacturers attributed the price increase to unexpected shortages of raw materials, unopened letters of credit, rising production costs and unfavorable economic conditions.

A steel dealer said that some manufacturers stopped accepting new orders due to lack of materials and pending orders, which meant that more price fluctuations were inevitable. Manufacturers would not put rebar in the market for a number of reasons, he added.

Sufiyan Adhia, former president of the Association of Builders and Developers (ABAD), said construction costs had risen by 60 per cent in the last year and were set to rise further due to the uncontrollable rise in the prices of construction materials, especially steel and cement. The construction cost of the high-rise project is now more than Rs 6,000 per square foot, from Rs 3,000 about a year and a half ago, he said. He claimed steel and cement manufacturers acted like a cartel to drive up rates without any checks from the government.

There is also growing concern about builders, who won't be able to hand over new units because of rising construction costs, while high food prices and utility bills are discouraging people from buying new condos and homes, or even renovating them. House of. Amin said this would directly hit manufacturers of at least 40 types of construction projects.

Local cement sales fell 17 per cent to 20 million tonnes in June FY23 from 24 million tonnes, while the price of an average 50kg bag of cement rose to Rs 1,042 from Rs 738 a year ago.

Based on Sensitive Price Indicator (SPI) data as of January 19, 2023, wage rates for painters, masons (Raj), laboratory workers, plumbers and electricians have increased by 11.17pc and 12pc respectively. From the week ending 20 January 2022, 14.51pc, 12.58pc and 13.56pc respectively.