Builders and infrastructure developers are now digging deeper into their pockets to obtain steel following an increase in prices of the commodity.

Steel manufacturers say the increased price is down to dwindling supply of scrap metals, which has forced them to import raw materials.

According to them, they depend on the Lake Zone as their main source of the scrap metals, mainly from mining activities, but the supply has gone down significantly.

A quick survey by The Citizen at some retail stores in Dar es Salaam shows that the price of steel has gone up by almost 50%. It now stands at Sh22 000 compared to Sh13 000 two months ago for a 12-inch piece.

The country’s demand of steel for various activities is around 700 000 metric tonnes per year while the production capacity from 24 manufacturers is 600 000 metric tonnes per year only.

This was revealed over the weekend at a dialogue organised by the Fair Competition Commission (FCC), which brought together steel manufacturers to discuss market challenges and the way forward.

Kamal Steel Ltd director Satyam Swatantra said the price of the scrap metals in the local market has risen due to scarcity and importation taxes.

Swatantra added that the manufacturers are currently facing a big challenge to remain in the market.

“Sometimes other factories are forced to close temporarily so that they can collect the raw materials,” he said.

For his part, Steel Master Ltd director Hitesh Patel said the international price of the raw materials for producing steel is down, but weakness of the shilling forces prices to hike.