AGL 5.75 Decreased By ▼ -0.08 (-1.37%)
ANL 9.08 Increased By ▲ 0.05 (0.55%)
AVN 79.25 Increased By ▲ 0.45 (0.57%)
BOP 5.21 Increased By ▲ 0.05 (0.97%)
CNERGY 4.73 Increased By ▲ 0.05 (1.07%)
EFERT 81.22 Increased By ▲ 0.67 (0.83%)
EPCL 50.87 Decreased By ▼ -0.84 (-1.62%)
FCCL 13.51 Decreased By ▼ -0.10 (-0.73%)
FFL 5.82 Decreased By ▼ -0.03 (-0.51%)
FLYNG 7.25 Increased By ▲ 0.13 (1.83%)
FNEL 4.80 Decreased By ▼ -0.05 (-1.03%)
GGGL 8.90 No Change ▼ 0.00 (0%)
GGL 15.82 Decreased By ▼ -0.23 (-1.43%)
HUMNL 5.88 Increased By ▲ 0.08 (1.38%)
KEL 2.59 Decreased By ▼ -0.01 (-0.38%)
LOTCHEM 29.98 Decreased By ▼ -0.03 (-0.1%)
MLCF 25.28 Decreased By ▼ -0.12 (-0.47%)
OGDC 72.63 Increased By ▲ 0.48 (0.67%)
PAEL 15.43 Decreased By ▼ -0.06 (-0.39%)
PIBTL 5.13 Increased By ▲ 0.12 (2.4%)
PRL 16.48 Increased By ▲ 0.08 (0.49%)
SILK 1.09 Decreased By ▼ -0.01 (-0.91%)
TELE 9.53 Decreased By ▼ -0.12 (-1.24%)
TPL 7.40 Increased By ▲ 0.10 (1.37%)
TPLP 19.29 Increased By ▲ 0.06 (0.31%)
TREET 21.87 Decreased By ▼ -0.08 (-0.36%)
TRG 144.68 Decreased By ▼ -0.29 (-0.2%)
UNITY 17.56 Increased By ▲ 0.94 (5.66%)
WAVES 10.01 Increased By ▲ 0.01 (0.1%)
WTL 1.37 No Change ▼ 0.00 (0%)
BR100 4,258 Increased By 27.9 (0.66%)
BR30 15,841 Increased By 19.2 (0.12%)
KSE100 42,374 Increased By 302.3 (0.72%)
KSE30 15,665 Increased By 161 (1.04%)
Follow us

Long steel makers are urging the SBP to cut interest rates urgently so that steel manufacturers slipping into financial troubles can hoist themselves up again. Said troubles have come about due to a slowing down economy, now worsened only by the devastating floods that have sent demand hurtling down. The steel industry joins several other industries that are having trouble keeping afloat though they may be better positioned to weather the storms. Cement is certainly one such industry. The outlook however is bleak.

Steel and cement prices have had quite a rally over the past 20 months. Between Nov-20 till Jul-22, price indices for cement and steel bars rose 70 percent and 90 percent respectively. Comparatively, the wholesale price index during this period increased by 56 percent which is high but not as shocking as the key construction materials. One caveat here is that PBS seems to have clubbed steel bars (long steel) and steel sheets (flat steel) under one head which would complicate and may even mislead price analysis. Nevertheless, it is clear that both steel and cement have had quite a significant and frequent bump on their price tags owing mostly due to the rapid increase in their costs of production (coal and steel scrap prices along with energy and power costs have been rising). This has very evidently begun to affect demand. Both cement and steel billets are recording lower sales, hitting their lowest in Jul-22 since last year.

Both cement and steel prices are now showing signs of weakness but it may not be enough for demand revival. Inflationary pressures coupled with higher taxation are likely to force private sector participants—prospective homeowners, home renovators, builders, and constructors—to delay construction until they can absorb the surged costs. A reduction in development funding indicates lower demand forthcoming from the public sector. Having said that, funds from PSDP will be diverted toward rehabilitation and reconstruction of flood-affected areas which will boost demand temporarily for the construction industry. Meanwhile, the dream of the Naya Pakistan Housing Program remains that—a dream, a forgotten one at that. After hitting pause to it months ago, the SBP indicated that the Mera Pakistan Mera Ghar scheme that offered mark-up subsidy on mortgages would be revived—at some point, whenever that point may be.

For now, interest rates are too high—for consumers to take out home loans, for builders to take out business loans and for construction material manufacturers to safeguard net earnings, especially true for highly leveraged balance sheets.

Comments

Comments are closed.

Construction: Fight or flight mode on

Pakistan seeks support from Bank of China to bring back macroeconomic stability

Pakistan receives $500mn from AIIB: finance ministry

Submarine cable disruption hits Pakistan's internet services

Ten terrorists killed in gun battle with security forces in Balochistan: ISPR

Gen Qamar Javed Bajwa hands over baton of command to Gen Asim Munir

Rupee remains stable at 223.95 against US dollar

ECP spokesperson sacked over statement regarding dissolution of assemblies

Hina Rabbani Khar meets interim Afghan government leadership on one-day Kabul trip

Oil jumps on hopes for easing of China’s COVID controls

Islamabad court extends Azam Swati’s remand for 4 days