Steel production in the July to May period (11M) rose 33 percent against last year. Domestic dispatches for cement however, dropped by 2 percent during this period. Curiously, steel production has grown much more than cements dispatches. The latter industry got a tough beating in the export market too.
Most building material costs surged, higher than inflation in general. In the past two years, cement and steel became 51 and 58 percent more expensive. This resulted in a delayed drop in demand, but certainly one that eventually materialized. The primary driver for growth thus far has been public infrastructure projects.
Hydro power projects require more steel reinforcement. This is where more cement is used compared to building construction. The cement to steel billet ratio over the past two years has dropped from 13 tons of cement for 1 ton of steel to 9 tons of concrete for each ton of metal.
SBP’s MPMG scheme has hit pause after approving (not disbursing) anywhere between 10,000 to 50,000 new home loans. SBP careful not to disclose too much data for a detailed look at how exactly the scheme performed. BR Research estimates suggest the scheme started off well perhaps, but had no way to ensure consistency and sustainability.
Current and expected demand both indicate how the policy failed to launch (more than a year after coming into effect), and how it will be missed in the long term.
Construction, Infrastructure and Mining Group Media Publication
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