Thursday, June 8, 2023
BusinessPrice of rebar soars by 50pc in just a month

Price of rebar soars by 50pc in just a month

Price of reinforcement bar exhibited a 50 percent upsurge within just a month due to foreign currency shortage induced supply shortage, The Reporter learnt.

Most rebar retail stores experienced shortage after the partial closure of metal factories that are facing shortage of inputs due to the forex crunch.

“The price of rebar is escalating every day, while there is a dearth in supply,” said Gizachew Alemu, an owner of rebar and metal retail Shop. “Even though the forex shortage largely contributed to the supply gap, hoarding practices of retailers and wholesalers had its share,” he assessed.

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A kilogram of rebar is being sold for 56 birr, up from 37 birr a month ago. Specifically, a 4.5kg rebar with eight millimeter width now costs 40 birr, while a 42Kg rebar with 24mm diameter has increased by twenty birr a kilogram to 97.70 birr.

The shortage has also created more demand for rebar, according to traders The Reporter spoke to. “Speculations that the shortage will be severe encouraged many to buy and hoard the item,” said Abdela, retailer of rebar at Meracto.

Manufacturers of rebar did not get foreign currency from commercial banks for over one and half years, according to sources.

“Almost all rebar manufactures are producing way below their production capacity, widening the gap between supply and demand of the item, said Fite Bekele, Corporate Communication Director of Metal Industry Development Institute.

“So the price upsurge is expected and it may continue unless the central bank approves foreign currency to the manufacturers.”

Last October, a steering committee comprised of officials from the Ministry of Trade and Industry and the Metal Institute, visited different industries and reported that forex shortage is the prime factor behind the shortage in the supply of rebar.

“Towards ensuring the fair allocation of forex, our Institute is already identifying the need and capacity of industries for the scarce currency. We expect this to be endorsed by the NBE very soon,” Fite said.

Meanwhile, construction companies are cry fouling over the soaring price of rebar, which has escalated their cost of construction.

“Over 90 percent of construction contracts do not have inflation adjustment clauses. Only few international projects with a construction period of over 18 months are subjected to adjustment for inflation,” said Haben Abraha, owner of a construction company.

He urged for the swift approval of forex to metal factories and enforcement of administrative measures to control hoarding by brokers and irresponsible contractors.

“Keeping this in mind, the soaring price of rebar will lead to bankruptcy of many construction companies and may result in delay of construction projects,” he noted.

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