Building materials dearer due to production costs

- POST REPORT, Kathmandu
Building materials dearer due to production costs

Aug 4, 2014-

Prices of construction materials like cement, steel, pipe, marble, paint, tile, sand, brick and electrical wire have increased in the Kathmandu valley since last year, said traders.

Binod Keshari Upadhyaya, president of the Federation of Construction Materials Associa-tion, said that prices of most building products had swelled due to dearer raw materials and various government policies. Problems in the clinker industry, higher transportation costs and wages also pushed up prices.

Cement prices have risen 8-10 percent this year, said the association. Most brands of OPC (ordinary Portland cement) cost Rs 650 to Rs 680 per sack compared to Rs 630 to Rs 640 a year ago. Similarly, PPC (Portland pozzolana cement) costs in the range of Rs 780 to Rs 800 against Rs 750 last year.

According to the Central Bureau of Statistics (CBS), prices of construction materials were 6.7 percent higher in the third quarter of the last fiscal year compared to the same period in the previous fiscal.  

According to the quarterly index of the construction sector released by CBS recently, 13 out of the 24 construction materials whose prices were compared witnessed a price rise of 10-18 percent over the year. These products are polythene pipe, bitumen, electrical items, marble, paints, glass, hume pipe, stone, clay, tiles, sand and timber.

A study of the figures for the last six years shows that prices of construction materials jumped 70.1 percent in the third quarter of the last fiscal year compared to the same period in fiscal 2007-08

Dhruba Thapa, president of the Cement Manufacturer’s Association, attributed the rise to higher production costs. “Due to load-shedding and rising wages, the cost of production has been increasing yearly which compelled us to hike prices,” he said. “However, many companies have reduced prices slightly due to low demand in the rainy season.”

Thapa said that the country was moving ahead towards self-sufficiency in cement with 75 percent of the present requirement being fulfilled by domestic products.

According to the association, there are 42 cement manufacturers in the country. He said that prices of cement would rise 10 percent from September-October when demand goes up. “Cement prices could be affected more due to problems in the crusher industry and the government’s announcement of a hike on import duty on slag,” said Thapa.

Similarly, prices of sand and pebbles have surged over the year. Traders attributed the rise to the government’s declaring 700 crusher factories illegal for failing to meet official standards. They have warned that there could be a shortage and prices would rise further in the day to come.

Similarly, prices of brick have increased 10 percent this year, said the Federation of Nepal Brick Industries.

Brick prices have risen to Rs 9-10 per unit from Rs 8-9 last year. Traders blamed the price increase on costlier raw materials and VAT imposed from last year. “The government imposed 13 percent VAT from last year which sent prices soaring,” said Mahendra Bahadur Chitrakar, president of the association. “Coal prices and workers’ wages have also gone up, affecting production costs.” 

Published: 05-08-2014 10:53

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