Prices of metal to remain sky high during this year
Real estate project owners are staring at higher costs following a demand-driven 50 per cent increase in global steel prices.
Metal products are likely to remain expensive this year after the commodity recorded the highest jump in the country’s producer price index (PPI), which measures the wholesale prices of items as they leave factories.
The latest Economic Survey 2022 showed production of basic metals reported a price increase of 23.37 per cent last year—the highest of all made products—followed by fabricated metals at 11.49 per cent.
Global prices of the material jumped by nearly 50 per cent last year due to higher input costs and energy shortages.
A World Bank report said the price of coal—a key input to smelting—nearly doubled between June and October last year, affecting the global costs of metal. Lockdowns imposed to curb Covid-19 spread also affected several metal markets.
The impact of this has been reflected locally with prices jumping by over 70 per cent last month. Barely two weeks ago, vendors were selling steel bars at Sh780 for D8; Sh1,150 (D10); Sh1,650 (D12); Sh2,750 (D16), and Sh4,850 (D20).
Largest increase
In January the same products cost Sh450 for D8; Sh600 (D10); Sh900 (D12); Sh1050 (D16) ; and Sh2500 (D20).
The sharp rise in the wholesale cost of metal saw the country’s overall PPI jump by 7.3 per cent. “This is the largest increase since the rebased index was introduced. The increase was witnessed in all sub-sectors except in the manufacture of beverages, wood, and products of wood and cork except furniture, and motor vehicles,” the survey said.
Pharmaceuticals and medicinal chemicals wholesale prices also rose sharply, jumping by 11.49 per cent.
Raw materials
Industry data shows the cost of key raw materials used in making essential drugs rose by up to 50 per cent averagely in 2021 due to supply disruptions in China. This affected prices of life-saving antibiotics such as penicillin, azithromycin, and cephalosporin.
Manufacturers of leather and related products also recorded a substantial rise in the PPI, which jumped 9.86 per cent.
Disruptions to the global supply chain hit leather prices. This, coupled with increasing demand for hides, saw leather price skyrocket by up to 22.5 per cent in 2021.
