CHENNAI: The prices of apartments are likely to go up due to the rise in cement and steel prices, according to Confederation of Real Estate Developers' Association of India (CREDAI) Tamil Nadu president Suresh Krishn.
Krishn told Express that the price of steel has gone up from Rs 45 a kg to above Rs 70 a kg, while cement prices have gone beyond Rs 500 a bag, thus impacting the construction cost. Builders Association of India (BAI) State treasurer S Rama Prabhu also said that the price of steel and cement has gone up and it would increase the cost of construction for an individual builder by 20 per cent.
Prabhu said that the price of steel has gone up in the last 15 days. Cement and steel are major construction materials and any increase in price would impact not only the housing sector but all infrastructure projects. Cement is one of the major construction materials used in all segments of construction industry namely, housing (55% to 65%), infrastructure (15-25%), commercial and industrial construction (10-15%) and industry (5-15%).
While CREDAI and BAI have written letters to the Prime Minister on the issue, it seems small and medium enterprises are also being impacted. KV Kanakambaram, president of Industrial Estate Manufacturers Association told Express that he has also written a letter to the PM on the plight of MSMEs. He said steel prices increased between March 2020 and June 2021 from Rs 45 to around Rs 80 per kg despite the input costs of steel manufacturing not increasing even by 20 per cent.
"This is evident in the unprecedented profits in the balance sheets of steel companies. Steel price increase has nothing to do with any domestic issue such as rise in input costs or change in government policy. The unusual, uncommon increase in steel prices is mainly due to excessive export of finished steel, thereby creating a shortage in India," he stated. "It is also the duty of the Centre to ensure that prices of steel are not allowed to rise in the local market in exceptional manner, upsetting the cost of government projects, killing MSME units and affecting the lives of the common man as steel is used in almost every product," he said.
"Steel prices have crossed all limits in the last 6-8 months. On a single day on June 1, price of steel went up by Rs 4,900 per tonne without any justifiable reason. Can we expect MSME units, ongoing projects or automobile manufacturers to be ready for such a shock?" he reasoned.
Meanwhile, a National Highways Authority of India (NHAI) source said that projects would be impacted due to Covid-19. "Let the pandemic get over. Then, maybe then steel prices will come down," he added.
Meanwhile, South India Cement Manufacturers Association (SICMA) has hit out at developers and builders. "Across markets, builders access cement at a rate of Rs 6,000 per metric tonne or below. That means cement constitutes Rs 150 per square feet of built up area. The amount being so low, one needs to ponder, how cement price can impact flat construction cost?" a SICMA statement said. However, steel manufacturers could not be contacted.