Real estate developers’ association Naredco on Friday urged housing and urban affairs secretary DS Mishra to check the rising prices of key raw materials, especially steel and cement, which, coupled with supply constraints, are impacting construction timelines.
Industry players said prices of key raw materials like steel, cement and bitumen have risen significantly in the last one year, which poses challenges for several sectors, especially infrastructure and real estate. These two are still reeling from the impact of the pandemic and the ensuing lockdowns.
“Construction costs have gone up over the past year with raw materials, particularly steel, cement, aluminium and copper, showing a sharp increase … Real estate developers are unable to pass on the hike in costs to home buyers and the strain on project viability is all too apparent,” Naredco national president Niranjan Hiranandani said.
Naredco said the industry looks forward to appropriate steps by authorities against what seems to be cartelisation.
Industry insiders said prices of various grades of steel have increased in the range of 60-100% between July 2020 and May 2021. Following the hike in May 2021, the price of hot rolled coil rose to Rs 72,000 per tonne, the highest since 2008. In July 2020, hot rolled coil was priced at Rs 36,500 a tonne.
Similarly, cement prices increased 50-70% from 2020 to 2021. The average retail price of cement is Rs 420 a bag at present, whereas in FY20 it was Rs 280. It is likely to increase further in the coming months, many fear.
Naredco suggested that steel exports be banned for two years till the issue of high prices and availability in domestic markets is resolved. It also recommended that prices of steel and cement be regulated till supply is restored.
“Import duty of steel should be reduced from 7.5% to zero for a period of two years and use of imported cement should be allowed,” it said.
Mishra assured the developers’ body that the ministry will look into these issues and discuss them with the ministries concerned.