KARACHI: Association of Builders and Developers (ABAD) Senior Vice Chairman Fayyaz Ilyas said that cement is the most important input in the construction of buildings and unabated increase in its prices will increase the cost of construction, subsequently making it arduous for the middle and lower middle-class to buy houses.
“The cost of building a house has significantly increased due to unabated increase in prices of cement. Cement and steel are two most important inputs in the construction of buildings and prices of both have increased significantly. It has made it difficult for the middle and lower middle class to buy or build their houses,” Ilyas told Pakistan Today.
He added that the unit cost significantly increases even for apartments because of the surge in prices of cement since it is the most important input. “The use of steel ends with the erection of infrastructure, but cement remains in use from the beginning to finishing as it is used in cementing tiles etc,” Ilyas said.
According to a Topline Research report, cement players in the North have hiked prices by Rs 10 per bag on the eve of the construction season. According to Intermarket Pulse, expectations of robust construction activities is due to the fact that 2018 is the year of elections.
The prices have been increased despite a decrease in South African coal prices after peaking at $98 per ton in 2018. It has come down to about $93 per ton as of the last closing while future contracts from October 2018 onwards are trading below $90 per ton. Coal is used as a source of energy to produce cement and its prices play an important role in defining the cost of cement production.
Ilyas said that the cement industry has been playing in a few hands and hinted towards cartelization of the industry. “The cement is exported at lower prices than it has been sold in the local market here,” said Ilyas while criticising the unjustified high prices of cement in the local market.