Cement prices drop by Rs 200 per bag, Rebar falls Rs 29 per Kg as construction slows; Bitumen shortage deepens

KATHMANDU: Prices of key construction materials in Nepal, including cement and steel reinforcement bars (rebars), have fallen sharply amid a prolonged slowdown in construction activity, while bitumen prices continue to soar due to supply shortages and import disruptions.

Industry stakeholders say weak demand across the construction sector has forced manufacturers and suppliers to reduce prices, even during what is traditionally one of the busiest seasons for infrastructure and housing projects.

According to Shiv Hari Ghimire, General Secretary of the Nepal Construction Entrepreneurs’ Federation, cement prices that had climbed to nearly NPR 800 per bag have now dropped to around NPR 600 per bag.

Similarly, the price of steel rebars, a critical material for buildings and infrastructure projects, has declined from as high as NPR 115 per kilogram to approximately NPR 86 per kilogram, representing a drop of NPR 29 per kilogram.

“The market lacks demand, and industries have been compelled to lower prices,” Ghimire said. “Despite the reduction in prices, construction activities remain largely stagnant.”

Construction Activity at Just 12 Percent

Ghimire estimates that only around 12 percent of construction work is currently progressing across the country.

With the end of the fiscal year approaching, he said some activity is visible mainly because contractors are seeking deadline extensions or completing administrative procedures rather than executing substantial construction work.

“Normally, this is the season when cement and steel demand rises significantly. This year, however, project implementation has been weak, resulting in a sluggish market,” he added.

The slowdown has affected not only private construction but also government-funded infrastructure projects, many of which are facing delays, funding constraints, and contractual disputes.

Lower Material Costs Offer Relief to Real Estate Sector

Bishnu Prasad Ghimire, President of the Nepal Land and Housing Developers Federation, said declining construction material prices could provide much-needed relief to the country’s struggling real estate sector.

“A reduction in steel and cement prices lowers housing construction costs, which ultimately benefits the real estate business,” he said.

However, he noted that the long-term impact will depend on whether the price decline is temporary or sustainable.

According to him, individual residential houses are currently selling better than large housing and apartment projects. Demand has been particularly strong for earthquake-resistant homes that comply with modern building standards.

Ghimire also emphasized the need for Nepal’s housing market to become more organized and professional.

“Instead of encouraging informal house construction and resale practices, the government should establish a framework that promotes real estate development through registered companies. That would make the sector more systematic, transparent, and secure,” he said.

Cement Manufacturers Confirm Price Decline

Cement producers have also acknowledged the downturn in demand.

According to Shankar Dhakal, Sales Head of Arghakhanchi Cement, the company is currently selling OPC cement at NPR 596 per bag and PPC cement at NPR 706 per bag.

“The price of cement has fallen by around NPR 100 per bag. Demand is no longer what it used to be, and weaker demand has forced producers to reduce prices,” Dhakal said.

Industry experts say Nepal’s cement sector has expanded production capacity significantly in recent years, creating intense competition among manufacturers at a time when overall construction demand remains subdued.

Bitumen Crisis Hits Road Projects

While cement and steel prices have fallen, bitumen—a crucial material used in road construction—has become increasingly scarce and expensive.

The current market price of bitumen stands at around NPR 160 to NPR 165 per kilogram, with industry participants warning that prices may rise further in the coming weeks.

According to traders, bitumen prices had recently surged to NPR 180–182 per kilogram before easing slightly. However, fresh supplies remain unavailable, and financing companies have yet to provide updated pricing, disrupting imports and market availability.

The Nepal Bitumen and Barrel Industry Association says rising petroleum prices have significantly increased transportation costs, pushing up bitumen costs even further.

Higher diesel and petrol prices have led transport operators to raise freight charges, adding additional pressure on already constrained supplies.

Dependence on India Raises Supply Risks

Nepal relies heavily on imports from India to meet domestic bitumen demand. However, industry representatives say shortages are also emerging in the Indian market, creating uncertainty for Nepal’s supply chain.

The Nepal Bitumen and Barrel Industry Association warns that if India struggles to meet its own domestic demand, exports to Nepal could be reduced or temporarily halted.

Road construction demand within India has reportedly increased substantially, causing delays in deliveries and tightening regional supply.

Contractors Under Pressure Ahead of Fiscal Year-End

As Nepal approaches the end of the current fiscal year, contractors face mounting pressure to complete ongoing projects.

Many infrastructure contracts are at risk of termination or penalties due to delays, prompting contractors to seek bitumen at any available price, including through credit arrangements.

Construction entrepreneurs say some firms have already declared informal “construction holidays” because of rising costs, payment delays, and material shortages.

The growing crisis has revived discussions about establishing domestic bitumen production or a refinery plant in Nepal to reduce dependence on imports and improve long-term supply security.

Diverging Trends Signal Construction Sector Stress

The contrasting trends—falling prices of cement and steel alongside soaring bitumen costs—highlight the challenges facing Nepal’s construction industry.

While cheaper cement and rebars may reduce building costs and support the housing market, the shortage and rising cost of bitumen threaten road construction and infrastructure development, raising concerns about project completion and economic activity in the sector.