Spike in cement prices slows construction activity

Builders’ Association to seek setting up of Cement Regulatory Authority

May 31, 2019 12:35 am | Updated 12:35 am IST

Even as construction activities were picking up in the city, an unexpected increase in price of cement that started a couple of months ago is hurting the industry.

“The prices of raw materials, transport, or labour did not go up for the cement industry. So there is no reason for the price rise,” says V. Sivarajan, president of the Builders’ Association of India, Coimbatore centre. The cost (retail) of a 50 kg bag used to be ₹270 two months ago. Now it is ₹400, he says.

Though the prices have remained stable for nearly a month now, it is said to have hit 25 % construction activity in the city.

The association will, at the national-level, appeal to the Union Government to set up a Cement Regulatory Authority, Mr. Sivarajan said. “Such abnormal cement prices cause huge losses to the real estate developers as also to the government and private contractors. The MRTP Tribunal have repeatedly found clear-cut evident against cement manufacturers indulging in cartel type of arrangements to create artificial shortage of cement to jack-up prices with the purpose of profiteering. The appointment of a regulator will help curb such malpractices,” according to a press release from the association’s president Sachin Chandra.

Building works on small-scale are going on in the city. But larger projects are getting affected. The average construction cost is ₹1,500 per sq.ft. An escalation of 10 % can be managed. If the hike is beyond that, the projects get affected as the price rise cannot be passed on to the customers.

In Tamil Nadu, the Government takes more than a year to grant approvals. Sometimes there is a steep rise in price of other materials. When cement prices also shoot up, it hurts the construction sector. Several developers and projects in the city have slowed down or up for sale mid-way because of this, say sources in the industry.

The builders keep cement stock for just about 10 days requirement. When the prices keep moving up, it is difficult to manage the situation, the sources say.

For the public, buying a house is a lifetime dream. Even if the prices go up, they do pay for it in the case of new projects or independent houses. But steep hike in cement prices without any reason is unfair, says Mr. Sivarajan. At the State-level, the association will appeal to the Government to have a mechanism to check cement prices.

It is not possible to go in for imports too. “Last time, when the builders jointly imported cement and it arrived at the Indian port, the domestic manufacturers reduced the price leading to losses for the builders,” he says.

C.T. Narayanan, former president of Coimbatore Builders’ and Contractors Association, however, contends that the price of cement goes up every year in February - March and is reduced in July. This year, the wholesale price touched ₹360 a bag here and remained at that level for about a week. It is stable for a month now at ₹330 to ₹340 a bag. Major works do get affected to some extent because of the increase, he says.

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