Control cement and steel prices: CREDAI

CREDAI has written to the PM and all concerned ministries urging to take note of cartelization by cement and steel manufacturers. It has called upon the government for an immediate intervention in bringing the soaring steel and cement prices under control. Real estate developers are experiencing an inevitable increase in construction cost and are faced with a situation that will create a delay in delivery, stalling of projects in some cases, thereby impacting the homebuyers to a greater extent. In such a scenario, builders are finding it difficult convincing the customers of this additional burden.

High prices of cement and steel have been a serious concern and many industry leaders and ministers have expressed their concern on public platforms too. The Minister of State for Road Transport and Highways, V K Singh, has warned cement companies against cartelization at an industry event. Even road transport minister, Nitin Gadkari had cautioned steel and cement manufacturers for the irrational upsurge in prices.

Chairman of CREDAI, Jaxay Shah said, "The real estate sector has been working on wafer-thin margins and is battling unsold inventory on one hand and unfinished projects due to lack of funds on the other. With a stagnant demand, developers have not increased the prices and are selling projects at affordable rates. Indian real estate sector plays an important role in strengthening the economy. Besides employing more than 40 million workers, the sector is a key partner in many Central Government schemes like Affordable Housing, Housing for All by 2022 and supports more than 250 ancillary industries. But the sector feels ignored because of lack of support from the Government on various issues. There is an urgent need to control the spiralling cement, steel & other raw material prices and I urge the Government to take necessary steps at the earliest."

He informed that cement prices have increased by more than 23% and the steel prices have increased over 45% since the beginning of this year. In January 2020, cement price (50 kg bag) was around ₹349 per bag and has now increased to ₹420 – 430 per bag in December 2020. Similarly, the steel manufacturers too have been taking undue advantage of the increase in demand for steel and have been increasing the prices every month. At the beginning of this year, the per ton rate of steel was ₹40, 000 and has now rocketed to ₹58,000 in December 2020.

The increase in the price of steel not only affects the real estate sector but has been adversely affecting other sectors.

Like all sectors, the real estate sector too has come out of near-zero business in the first 2 quarters and was hopeful of revival during the festive season. High raw material costs make projects financially unviable and are causing distress amongst developers.

Any increase in raw material cost will lead to an increase in construction costs and overall project cost. As a result of which many developers will be forced to halt construction work, thereby impacting the delivery of the projects and so on. This will have a cascading effect on the homebuyers also.