The steep increase in the cost of construction material has rocked the builders' applecart. The construction industry is grappling with steep rise in prices of cement and steel.
With the cost of basic construction raw material rising, many building independent houses and real estate developers are feeling the heat as the steel, cement and labour are the key components that make for almost 75 per cent of the overall cost.
A slow down in construction activity is witnessed all over the city.
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Steel, which used to be sold at around Rs.40,000 a tonne, 15 days ago, is now sold at Rs.53,000 a tonne. There is an expectation that it would touch Rs.60,000 in the next couple of days. Likewise, the cement prices have also gone up. A bag of cement used to be available in the range of Rs. 250 to Rs. 280. The cement prices, now, touched Rs.300 a bag.
‘Cartel formed'
The builders feel that the cement prices have gone up as some of the cement companies have formed a cartel to create artificial scarcity. The sharp rise in prices has affected the building sector adversely.
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The spiralling costs of significant construction materials has been putting a great pressure on project execution as they find it difficult to keep their margins intact, they say.
Greater Vijayawada Builders Association founder and senior builder Gadde Rajaling says the reality sector was just recouping from the economic slow down.
Now, the input costs have gone up by 15 to 20 per cent putting them back to square one.
Though the market was good, the builders were unable to go ahead with new plans, he explains.
There are as many as 268 steel shops in Bhavanipuram steel yard and about 10 shops at Ramavarappadu.
These shops sell not less than one lakh tones of steel. There are more than 200 cement shops in the city, and used to sell about 60,000 tonnes of cement every month. It has plummeted to 50,000 metric tons as the builders and individuals are shying away.