Post-Budget Adjustment Keeps Cement and Steel Prices Stable—for Now

Following the rollout of Pakistan’s Federal Budget 2025, the country’s construction sector has seen a brief reprieve, as the prices of cement and steel remain largely unchanged despite fresh tax adjustments. Industry leaders, however, warn that this fragile stability may not last long unless the government takes a more measured approach to taxing essential construction materials.

Cement prices, which had been on a steady rise throughout 2024, have now settled between Rs 1,300 and Rs 1,450 per 50 kg bag, depending on brand and region. Among the popular brands, Bestway and Maple Leaf are selling near the higher end of the range, while smaller players offer slightly more competitive rates. Meanwhile, steel reinforcement bars (rebars), essential for both residential and commercial construction, continue to trade between Rs 238 and Rs 244 per kilogram, with no significant shifts post-budget.

The apparent price freeze comes despite notable fiscal changes. The Federal Excise Duty (FED) on cement was doubled from Rs 2 to Rs 4 per kilogram, a move intended to bolster federal revenue. Similarly, the government removed the sales tax exemption on imported iron and steel scrap—a change expected to impact local steel manufacturers, who rely on imported scrap to produce rebars and billets.

According to market analysts, the current price stability is more a result of subdued demand than market confidence. “We’re seeing developers slow-walk new projects due to economic uncertainty and high financing costs,” said infrastructure consultant Ahmed Kamal. “That’s helped cushion the impact of the new tax rates—for now.”

The Federal Board of Revenue (FBR) has also implemented a nationwide Minimum Retail Price (MRP) mechanism for cement, aimed at preventing under-invoicing. This means taxes will now be calculated based on standardized pricing data, leaving less room for manipulation. While this reform could improve compliance, many in the industry fear it may also push smaller manufacturers out of the market.

Although the Budget 2025 was touted by the current administration as a “revenue-oriented” plan, critics argue that overtaxing productive sectors like construction could backfire. Higher input costs, if passed on to consumers, will further dampen housing development—a sector already grappling with slow growth.

The coming months will test whether the construction materials market can absorb these fiscal shocks without triggering inflation. If not, the ripple effects could stall infrastructure development at a time when Pakistan urgently needs economic momentum.