Concerns as cost of steel hits the roof by 40pc on rising fuel prices

By Remie Otieno

A steep rise in the prices of building materials has worsened the financial woes of Kenyan builders who are still grappling with the adverse effects of the Covid 19 pandemic.

Prices of materials such as cement and steel have hit the roof over the past six months, causing concerns among construction managers who are worried about the additional costs they have to incur to keep their sites open.

Those concerns are being compounded by the rising fuel prices brought by the ongoing Russia-Ukraine war.

“An assessment of the market trends has shown that some steel products have increased by up to 40 percent since December 2021 to date. We have since established a number of underlying factors resulting to the rise in paint, steel and cement products,” reads a worrying statement by the Architectural Association of Kenya (AAK) is Kenya’s leading Built and Natural Environments professional association.

What’s worse the Kenyan currency has increasingly continued to weaken against world currencies in recent months and is projected to remain under sustained pressure due to bets on the dollar continuing to gain, reduced inflows from exports, and elevated global oil prices.

For instance on 14th December 2021, the KES traded at 112.9 per USD, depreciating 0.9 percent from the same day in the prior month and weakening 3.3 percent compared to the same day in 2020. Today, the KES is trading at 114.40 per USD.

An investigation and expert analysis by members of the AAK Quantity Surveyors’ Chapter has revealed that another major cause of price increase in steel and other building materials may be attributed to the rising prices of oil and related products.

A major percentage of energy used in cement and steel production is petroleum oil which has equally been affected by consistent rise in prices occasioned by the COVID-19 pandemic and most recently by the Ukraine-Russia War.

One of Russia’s main exports is petroleum and petroleum products, which are facing sanctions throughout the world, causing a hike in petroleum prices.

The Energy and Petroleum Regulatory Authority (EPRA) recently released an advisory on the maximum petroleum prices in Kenya with the net effect being a rise of Sh 5 in petrol and diesel prices.