Pakistan’s construction sector remains sluggish, weighed down by persistently high steel prices that continue to discourage both public and private development activity, according to a local newspaper report.
Despite broader signs of economic stability, such as falling interest rates, a stable rupee, and rising remittances, builders and homebuyers are struggling to move forward with new projects. The sector’s woes are amplified by the high cost of construction materials, particularly steel rebars, which play a critical role in structural development.
Steel rebars account for roughly 40-45pct of the cost in high-rise projects and 20-25pct in housing construction. A surge in prices over the past two years has slowed demand considerably. Currently, rebars are offered at PKR 240,000 (USD 855) per ton, slightly down from PKR 260,000 in March 2024. But according to PALSP General Secretary Syed Wajid Bukhari, demand remains weak, with past price hikes driven by currency devaluation making construction unaffordable for most Pakistanis.
The broader impact is evident in a 6.6pct drop in cement sales during the first nine months of FY25, falling to 27.46 mln tons, a sign of reduced construction activity across the board. Additionally, imports of steel scrap, a key raw material for long steel production, declined to 1.7 mln tons in the first eight months of FY25, down from 1.81 mln tons in the same period last year.
Adding to the challenge, the government’s cutback on public sector development projects has further dampened demand. While the formal, tax-compliant steel sector faces increasing pressure, informal and non-compliant producers of substandard steel continue to thrive in the shadows.
1 USD / 280.7 PKR