THE cost of steel products used in construction has increased by an estimated 40 per cent in some hardware stores as result of higher freight prices coupled with a global shortage of steel.
Bhagwansingh’s Hardware group marketing director Baliram John said the reason for the increase, especially in steel products, was because of the closure of factories globally due to the pandemic.
“For instance, in India where you had several factories operating, you only have five operating now and this means that the demand for the product will be way ahead of the supply. To compound it, the shipping lines would have been reduced significantly, as there was not the volume. This means that the price of logistics went up drastically,” John said.
He said the other factor that caused the increase in the price of steel is higher freight costs.
“A container out of China used to cost US$2,500 and is now costing US$14,000; that is more than quadrupled…The pandemic has caused a lot of havoc, in terms of overall pricing.”
Also speaking on the price increase was General Hardware CEO Krishna Ramlagan, who said roofing items at his hardware had been increased by between 15-25 per cent.
Ramlagan, whose hardware is located in Couva, said while the cost from some of his suppliers has doubled he tried not to burden the consumer with a 100 per cent mark-up.
He said some suppliers were not being supportive especially after this second lockdown that the industry faced.
“Local suppliers are demanding that we pay for goods in advance, otherwise no supply of goods. Credit is something I gave to contractors and other consumers, so for some of these suppliers to demand advance payment instead of credit, which is honoured by Ramlagan Hardware, is unfair,” the CEO lamented.
He added that his business has never taken advantage of its customer or engaged in black market selling, which is why prices have not increased by too much.
Kelvin Ghany, the owner of wholesale distributors of hardware and building material with his name, said the increase in freight has caused his prices to go up by 40 per cent.
“Lumber, for example, which is imported from the United States, has gone up over a 100 per cent in some sizes due to supply and demand as well as the freight. The burden of foreign exchange, which continues to plague us, had an impact on the end user. Some importers are forced to source foreign exchange outside of the banking system to bring in their goods.”
Ghany said raw materials have also increased for tools and plumbing, so it’s a ripple effect all round.
He noted because of the scarcity of supplies internationally, gouging is taking place in some instances.
“To secure a booking on a container ship, you have to agree to this extortionate costs and wait to see if they have space to fit the importer in at that rate, or pay an additional US$1200 which is taking advantage of the situation because the goods have already been paid for. This is happening in Asia, South America and the US,” Ghany added.
Expressing concern about the increases, head of the Trinidad and Tobago Contractors’ Association (TTCA) Glen Mahabirsingh, in giving a breakdown of prices, cited that last November the general retail price for reinforced rods, also called rebar, was $4,200 per tonne and now the retail price was $8,000 per tonne, representing a 90 per cent increase.
“For the ordinary man, this means that a typical three-bedroom house will generally utilise approximately five tonnes of rebar. If you need to purchase steel at the current prices your house would cost you around $19,000 to $20,000 more,” he said.
Mahabirsingh noted that a typical three-bedroom home with an average roof area of 3,000 square feet would have cost approximately $150,000 (sheeting, gutters, soffits and framing) in early 2020. In 2021 that same roof will cost $200,000, which is an increase of approximately 30 per cent.
The TTCA head said these price increases have affected the construction industry and he does not see the issue being rectified in the shortest possible time, with the pandemic still affecting many factories globally.