Imported steel prices in the sultanate have risen approximately 15 per cent in two months - adding to the woes of construction firms already battling rising building materials prices and labour costs, according to industry executives and experts.
With steel prices expected to continue rising over the next two quarters, industry sources say the price for imported steel has grown from around RO266 per ton in November 2011 to RO305 per ton in January 2012.
Although Oman imports the majority of its steel from Qatar, Turkey and the UAE, the prices of locally-produced steel bars are also currently around RO300, which is significantly higher compared to the prices two months ago.
Saurabh Sen, the general manager of Bahwan Building Materials Company, said rising scrap prices and growing demand are the factors behind soaring prices, but expected production expansion in Abu Dhabi and Oman might ease medium-term prices.
He said, "The prices have gone up sharply in the last two months on the back of rising steel scrap prices. It is expected that the prices will continue to rise in the first two quarters of this year. "The demand is relatively higher due to ongoing port and road projects."
Acknowledging that escalating steel prices place a further burden on construction projects, Krishnakumar Taori, group managing director of Hasan Juma Backer Trading & Contracting Company, told Muscat Daily that projects are stalling as a result of the higher prices.
He said, "As steel is one of the major components in the construction industry, even the slightest increase in the price structure is bound to have a drastic impact and delays in the procurement process. Several projects have to be temporarily stalled mid-way due to the escalation in prices."
Ahmed Sharif, vice president- procurement at Galfar Engineering & Contracting Company, added that the sharp rise in steel prices is adversely affecting the construction sector, and that it was "likely to rise further in the short term."
He said, "The prices for steel scrap are going up in the international markets which is pushing up the steel prices in the local market also." Dr Bhaskar Datta, chief executive officer of Al Jazeera Steel Products Company, added that "there is less availability of steel scrap this time in the global markets."
He said, "Most of the large steel plants, especially in China have cut production in the last quarter due to soaring raw materials costs. "Steel producers are playing the game to keep the prices higher by cutting production to adjust with the available demand."
© Muscat Daily 2012
