Construction Industry Faces Challenges Due to Price Hikes

The recent announcement of increased prices for cement and steel in the 2024-25 Budget is set to have a significant effect on construction endeavors across Pakistan. This surge in material costs is poised to elevate overall project expenses, potentially impeding the pace of construction activities. The approved federal budget has introduced a Rs100 excise duty per 50kg bag of cement, leading to a price hike in the local market. Consequently, the cost of a cement bag now falls between Rs1,400 to Rs1,450.

Furthermore, there has been a noticeable uptick in cement exports, with 7.15 million tonnes shipped since the commencement of the current fiscal year, compared to 4.57 million tonnes during the same period last year. However, the export volume for June this year witnessed an 11% decline from June last year, with 0.51 million tonnes exported.

On a different note, steel manufacturers have opted to raise steel rebar prices by Rs5,000 per ton effective from July 1, 2024. This adjustment has pushed steel prices to fluctuate between Rs. 262,000 to Rs. 273,000 per ton, with the rationale being the anticipated increases in electricity tariffs that producers are transferring to consumers.

The escalation in cement and steel prices is poised to pose challenges for construction projects in Pakistan, potentially leading to delays and increased costs. Stakeholders in the construction industry will need to adapt to these changes and explore strategies to mitigate the impact of these price hikes on their projects.