The volatility in the price of steel, one of the key construction materials, has affected the building industry hard.
According to industry sources, in March 2020, before the imposition of phase-I of the nationwide lockdown, a tonne of steel (local brand) was sold for ₹43,000. The price of one of the top brands was quoted at ₹55,000 a tonne in Tiruchi.
The price of the local brand was increased to ₹48,000 in November 2020 and ₹62,350 in January 2021. The price of the leading brand of steel went up to ₹74,000 in January. The prices went up further in April with a tonne of local brand steel touching ₹63,000 mark. The prices of top brands also jumped up correspondingly.
The prices of local brands and top brands are currently hovering between ₹60,000 and ₹71,000 respectively now, industry sources said.
Expenditure on steel constitutes about 20% to 25% in construction of bridges and 15% in construction of buildings. The constant volatile situation in prices of steel in the upward trend is troubling the builders. “Signing new projects or launching new ones is really an uphill task due to the cascading effects of lockdown. The steep rise in price of steel and other construction materials have compounded the woes of construction industry,” said Ravichandran, former president, Confederation of Real Estate Developers Associations of India, Tiruchi chapter.
Though the prices had come down slightly when compared to April this year, he said that the prices were still on the higher side. Price stability for at least two years was essential for taking up new projects. Though organised players have the wherewithal to manage the situation at least to an extent, it is the small and medium players, who are bewildered about completing the projects.
‘Worst two years’
“Last two years are the worst in our life. New projects are hard to come by. The rise in prices of materials, including steel and cement, has hit us hard and we find it difficult to complete the projects,” said M. Selvakumar, an engineer in Srirangam.