High Steel Prices Affecting Construction Retail Business

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Steel retailers in Uganda are facing a slump following the fast rising steel prices and reduced demand in the local construction industry.

The retail price of 12 millimeter steel bars in the hardware square of Nakasero Market has increased from 15,000 shillings to 30,000 shillings over a three month period. 16 millimeter steel bars that are used in building columns have risen from 44,000 shillings to 50,000 shillings, which a 32 millimeter steel bar has increased from 85,000 shillings to 150,000 shillings over the same period.

Paul Segonja, a trader in iron bars on Sinai Bin Amir Street in Kampala, says the volume of people buying his stock has reduced considerably, despite a boom in the general construction market. He says he is lucky if he sells even one iron bar a day.

Amos Sekabira, whose business is located in the same area, attributes poor sales to the high competition in the steel retail industry. He says bigger players have abandoned the wholesale business, using their clout to encroach on small businesses.

Trouble in the steel market is not confined to Uganda. Internationally, steel prices have almost tripled in the past year. According to information from MEPS International, the U.K-based independent supplier of steel market information, in April 2007 a tonne of hot rolled steel coil was 617 dollars. In April this year, it had increased to 915 dollars per tonne. The price of hot rolled steel plates rose from 788 dollars to 1,065 dollars over the same period.

Stuart Mwesigwa, business development manager at Roofings Limited, says the rise in international steel prices that is partly attributed to the construction boom in China has affected work at the Lubowa-based industry. He says Roofings Limited is challenged by the low purchases and the high costs of running the industry.

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Deo Kiweewa is a real estate developer who is building a large shopping mall on in downtown Kampala. He says that although steel is expensive, he is willing to pay the price in order to uphold the quality of the building. He says he is sourcing steel from Hungary and South Africa, which although are more expensive than those in Uganda, are considered to be of higher quality.