The rise in steel prices is leading to increased cost of construction for residential and commercial projects, giving jitters to realty sector. According to inputs from both the real estate sector and the steel industry, steel prices have gone up by about 40 to 50 per cent over the past six months. While this comes as a welcome change for steel traders who have been reeling under several problems in the recent past, builders and construction companies are worried over the increasing burden.
“Realty sector has already been burdened with rising cost of cement and labour. Now even steel prices have gone up, creating severe pressure on projects that are already in execution. Steel prices have increased from about `30,000 a tonne six months ago to about `50,000 per tonne. Steel contributes to about 15 per cent of total construction cost of a unit and the steep rise in its price will increase the cost by about `90-180 per sq ft,” said Ram Reddy Gummi from CREDAI.
CREDAI has already given a representation to government urging it to bring down steel prices, alleging that domestic steel suppliers have been citing the import duty – introduced to deter imports – to steeply hike the prices. However, steel industry representatives disagree with CREDAI. “Prices of all the raw materials used in manufacturing of steel like coking coal and sponge iron have gone up. Also, the demand has risen globally, leading to price rise.
In fact, steel industry has been in constant pressure over the past five to ten years, and just recently, it has seen positive momentum with price rise,” said Anil Agarwal, steel industry representative from FTAPCCI. With several steel industry representatives maintaining that steel prices may stay at the present price level for the next two to three months, realty sector is expected to see no relief in the immediate future and gear up for increased cost of construction.