Market News

Iron sheet usage up 4pc, cement down

CEMENT

Cement bags on display at an hardware shop.--FILE

The volume of iron sheets sold in the first nine months of 2019 rose by four percent to 207,221 tonnes, reflecting an increase in usage by private home builders.

Data from the Kenya National Bureau of Statistics (KNBS) shows that the volume rose by 7,442 tonnes from the 199,779 tonnes realised during a similar period in 2018.

The increase reflects recent reports by realtors and lenders indicating many Kenyans owning parcels of land in satellite towns and within Nairobi’s suburbs were putting up stand-alone properties.

According to the Kenya Bankers Association latest property report, most investments were done in satellite towns across the country neighbouring major towns where buyers and investor-developers took advantage of the lower land prices.

Many developers are also opting for iron sheets instead of clay tiles in roofing to collect rainwater for domestic use, given the lack of connection to water mains in the far-flung suburbs.

KBA Director of Research and Policy on Financial Markets Jared Osoro said maisonettes reported a 17 percent rise in the last quarter of 2019 compared to 10 percent realised in the previous quarter, mostly within Nairobi’s suburbs and major urban centres.

Major public investments in roads constructions have benefited satellite towns with most people avoiding purchase of land in major towns due to prohibitive prices.

This increase in roofing material sales was even as the market saw a lag in cement consumption, which went down by 1.7 percent to 5.33 million tonnes in the 11 months to November 2019.

Cement consumption is however also dependent on large infrastructure projects, which slowed down last year with the completion of phase 2A of the standard gauge railway to Naivasha and reduced public expenditure on projects.

The lower consumption continued a trend that has hit the market over the past few years, and which has also had a negative effect the fortunes of cement producers.

Bamburi Cement’s net earnings dropped 1.5 percent to Sh393 million in the six months to June 2019, largely helped by a tax credit of Sh370 million.

ARM Cement is in administration due to piling debt and losses, while State-owned East African Portland Cement Company (EAPC) has also been struggling financially.