High demand for steel amid low global supply has seen prices of construction metals shot by up to 25 per cent in Kenya with a kilogramme currently selling at Sh125 up from Sh85 in December last year.
A spot check my the Star Newspaper in most hardwares in Nairobi and Kiambun county over the weekend established that most metal suppliers are clinging on last year's stock, with thos willing to sell quationg high rates.
''I have no idea what is really going on. I expected prices to be much lower considering low construction activities due to coronavirus. Suppliers have increaed prices by upto Sh30, we pass the cost to end users,'' Jane Waigumo, hardware operator in Huruma, Nairobi said.
Another operator, Dan Wamae in Gachie, Kiambu County told the Star that common steel grades Fe 415 and Fe 500 are difficult to find in the market.
''Standard size beams of 9 ʺ × 12 ʺ are rare to find on shelves. I sold my last stock in January. Still waiting on my suppliers,'' Wamae said.
Manufacturers of steel products have increased prices of goods ranging from construction bars to galvanized sheets and steel tanks to reflect soaring metal prices in the global market.
A source at Devki Steel Mills who sought anonymity told the Star that orders have increased tremendously since the start of the year.
''The demand has more than trippled compared to November last year. I think construction backlog occasioned by Covid-19 break might be the leading casue,'' he said.
He added that producers are dedicating stock on big construction projects like Nairobi Express Way which are ready to pay more or in bulk.
An insider at the Olkalau Road based Insteel Limited said that they have been forced to raise prices to keep up with the global demand.
''Prices are up between 10 and 20 per cent in tandem with rising production costs,'' he said.
The cost of metal-related products including reinforcement metal, window frames and door panels is expected to increase.
This outlook is set to affect that real estate market, pushing homeownership beyond the reach of a large segment of Kenya’s middle class.
Tenants could also feel the heat as landlords adjust rent upwards to capture the additional costs incurred in building new homes and repair of established homes.
Prices of construction material have been rising since countries started easing Covid-19 preventive measures.
Steady recovery in key global market has however increased demand for commodities forcing analysts led by the International Monetary Fund (IMF) to forecast that the current rally in prices will continue in the near term.
Yesterday, Fitch Ratings said the recent global rally in steel prices will be short-lived, with prices starting to decline towards the end of Q1 2021 as steelmaking production continues to be restarted.
According to the firm, vast steelmaking capacity idled during the heights of the pandemic could not be brought online quickly enough to meet recovering steel demand and restocking, leading to the rapid rise in prices.
Luke Wamalwa, a bank teller in Nairobi currently putting up a house in his rural vilklage in Bungoma hopes that the demand and supply will stabilize soon.
''Prices are scaring. I have been forced to put construction on hold, hoping that metal prices will ease,'' Wamalwa said.
