This archive report was first published on 23 August 2020.
Steel prices have skyrocketed by 25% in just one month, with the housing industry bearing the brunt of the impact. The surge is attributed to supply disruptions caused by the Covid-19 pandemic, which has led to a shortage of raw materials.
According to a survey, the prices of steel bars, denoted by their strengths TMT8 and TMT10, have increased to Sh470 and Sh660, respectively, in Nairobi. In other towns, prices are significantly higher due to transport costs.
Just last month, the same steel bars retailed at between Sh350 and Sh530, representing a significant spike in prices. Guru Raval, the chairman of the Devki Group of Companies, attributed the pricing distortion in Kenya to a shortage of raw materials.
“It has been a little bit unstable as the international availability is quite short owing to the impact of the coronavirus,” Raval said.
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 the country has not exploited the mineral, leaving it vulnerable to international market fluctuations.
It could take up to six months for the supply disruptions to be fixed and prices to normalize, according to Raval. Smaller steel mills have been quick to adjust their prices to reflect the increase in the global market.
Steve Oundo, an architect and former chairman of the National Construction Authority, warned that the increase in steel prices would have a significant impact on housing prices.
“There has been low production globally owing to Covid-19, hence this is a supply versus demand issue which is raising the prices. It will impact negatively on the housing industry through increased costs,” Oundo said.
