CHENNAI: Railway contractor Krishnappa Venkatesan is a worried man. With the price of steel changing daily, he is struggling to procure a large consignment of steel rolls for a project he has undertaken. Ask him what the current price of steel is, and he angrily quips: “It keeps changing. How can I give you a realistic number?”
Prices of the metal, which hovered around Rs 50-55 per kg before the year began, is now Rs 80-85. Steel companies are eagerly watching the prices before clearing orders. While the increase in prices is being linked to the Russia-Ukraine War, many refuse to buy the theory and blame it on cartelisation.
Interestingly, Russia is the third largest global producer of nickel, a key raw material used in stainless steel production. It is also a leading global exporter of iron ore pellets. Supply disruptions of these key ingredients have impacted the availability of steel. The impact has been such that infrastructure projects could soon get costlier.
Venkatesan alleges the rise in steel price is not being reflected in the Reserve Bank of India index also. In the month of January, steel price increased by Rs 10,000 but in the RBI index it was shown as Rs 3,000, claims Vekatesan. He says work on many railway projects have slowed down. Similar is the story of road contractors as the price of bitumen has gone up by 60 per cent. A contractor working on a state highway project says the price of bitumen has gone up due to increase in crude oil prices globally. However, he feels the State government will compensate at least 50% under the price overrun clause.
Similarly, Chennai Metro Rail sources told TNIE that rates for the tenders were fixed earlier and the recent price rise may impact contractors. “If prices continue to remain on the higher side, they could pose a problem later,” the source said. A National Highway Authority of India (NHAI) official stated prices of steel and bitumen are being monitored. “We will adequately compensate the contractor if it goes out of control,” he said. NHAI is implementing 38 projects covering 1,572 km in the State.
George Rajkumar, country president, Grundfos India, one of the largest pump manufacturers, says profits for the overall pumping industry (Rpt overall pumping industry) have dipped by 3 to 4% this quarter. He wants the State to buy steel from vendors in bulk and sell it at an affordable price. Aditya Engineers MD K Sai Satya Kumar, who makes submersible pumps at Ambattur Industrial Estate says MSMEs too have been hit hard. “I have only 15 days’ steel stock left and it is difficult to purchase raw materials,” he says.
Meanwhile, property developers have already increased prices by Rs 300 per square metre. “We have increased prices and passed them on to consumers. Work on sites has slowed down but not stopped. Prices of all raw materials, including cement, have gone up,” says Padam Dugar, president of Dugar Housing and president of Chennai chapter of Confederation of Real Estate Developers’ Associations of India.
Meanwhile, steel manufacturers held a meeting with the State Industries Minister Thangam Thennarasu on Friday. Even cement prices were discussed. A top official from MSME department told TNIE that during the meeting, the government requested manufacturers to consider reducing the prices. “They said they will consider and come back on Monday,” the official added.
South Indian Cement manufacturers’ Association (SICMA) denied that prices of cement have gone up abnormally. A statement from SICMA said cement price for the current financial year is lower than the last financial year. Cement is priced in the range of Rs 400 (per bag). “The three main input costs in production of cement are fuel, power and transport. The State being totally deprived of domestic coal (from Singreni or western coal fields) is dependent on imported coal for both fuel and power. Ironically the cost of imported coal has gone up by four to five times in the last few months. Coal itself is becoming scarce,” a SICMA statement added.