This archive report was first published on 23 August 2020.
Kenya's steel industry is facing a perfect storm as prices surge by 25% in just one month, largely due to supply disruptions caused by the Covid-19 pandemic.
The sudden increase in prices has sent shockwaves through the housing industry, where steel is a crucial component, exacerbating an already struggling sector.
According to a survey across retail outlets dealing with construction materials, the most widely used steel bars, denoted by their strengths TMT8 and TMT10, are selling in the range of Sh470 and Sh660, respectively, around Nairobi.
However, prices are significantly higher in other towns due to transport costs, as most steel production is concentrated around the capital.
Just last month, the same steel bars retailed at between Sh350 and Sh530, representing a spike in prices that has not been witnessed in recent years.
Iron ore, the main ingredient in steel, has seen its pricing shoot to its highest levels since the global financial crisis in 2008.
Kenya has confirmed deposits of iron ore, but there has been no meaningful exploitation of the mineral, leaving the country vulnerable to pricing shocks in the international markets.
It could take up to six months for the supply disruptions to be fixed and prices to normalize, according to Guru Raval, the chairman of the Devki Group of Companies.
Manufacturers have communicated price changes to their traders multiple times, but the impact of the spikes in the international markets would be felt more than once when the costlier consignments of inputs eventually land.
