Prices of building materials fall as demand drops

Prices of building materials have declined amid a slowdown in construction activities. According to dealers, brick, cement and steel prices have dropped significantly in a year due to low demand and rising competition.

The price of cement price has come down by Rs 100-150 per bag depending on the brand, of which there are more than 30 in the market.

State-owned brands Hetauda and Udaypur, whose prices had increased up to Rs 800 per 50 kg sack, now cost Rs 715 and Rs 725 respectively. Currently, around 75 percent of the requirement in the domestic market is being fulfilled by local brands.

The current price of PPC cement is Rs 425-50, and OPC costs Rs 500-525 per sack in Hetauda and Birgunj where most of the manufacturing units are located. When these products reach the capital, prices go up by some Rs 100 with the addition of transport costs, mark-up by retailers and other charges.

Pashupati Murarka, vice-president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said that there was no doubt that the country had reached a position of self-sufficiency in cement, and that as result of increased production, prices had declined. “The supply of construction materials outstrips demand as the housing sector is going through hard times,” he added.

At present, Jagadamba, Ultra and Brij brands of cement are selling for Rs 550, Rs 615 and Rs 610 per sack. Similarly, Nirman, Jaypee (Indian) and Maruti are being sold at Rs 530, Rs 640 and Rs 630 respectively. Cement accounts for an estimated 30 percent of the construction cost, according to contractors.

Similarly, the price of steel, another major construction material, has come down by over Rs 10 per kg in a year. “Prices have dropped to an average of Rs 72 per kg from a high of Rs 100 about two years ago,” said Binod Kesari Upadhyaya, president of the Nepal Construction Materials Dealers Association. He added that steel, cement and brick prices had slumped for two main reasons—a slowdown in the construction sector and increased production by manufacturers.

Currently, Panchakanya steel rods cost Rs 76 per kg, and Jagadamba’s retail price is Rs 73 per kg. During the same period last year, these products used to cost around Rs 80-82 per kg, according to dealers. There are more than a dozen steel factories in the country.

Brick prices have also gone down 10-22 percent. “A” grade bricks which were selling for Rs 10,000 per 1,000 units have come down to Rs 8,200. Likewise, “B” grade bricks have come down to an average of Rs 7,200.

Brick traders have attributed the drop in prices to a downturn in the housing sector and increased imports from the Tarai. “Brick sales have plunged 50 percent compared to last year, while imports from the Tarai have climbed 15 percent,” said Ramesh Baidhya, proprietor of Jay Barahi Brick Depot at Koteshwor.

Meanwhile, imports of construction materials through Birgunj Customs were also down in the last fiscal year. The import of building materials like MS billet, steel wire rod in coil, pig iron, polythene granules, aluminium foil, iron angle chain, bitumen and semi-finished iron rods witnessed a sharp fall, according to Birgunj Customs.

The drop in imports of construction materials is in line with the overall slowdown in imports in the last fiscal year which resulted in a revenue deficit of Rs 16 billion against the target.

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