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Sunday, January 25, 2015
Cement prices shoot up by Rs.100, builders left in the lurch
[Editor: The text says, "Apart from cement, the PRICE of STEEL has also witnessed an upward movement". This was expected as the cost of a single building material cannot increase, in isolation. After the monsoon, the construction activity have picked up in full-steam, all over India, and it is only time that the steel prices would rise-up with full-gush; to balance the domestic demands. Meanwhile, the coal prices have been on the downswing in recent times, adding cheer to the bottomline of the steel companies. The import of coal is projected to rise to as much as 240 million tonnes in 2015-16. Earlier there were media reports that: The Chinese government has unveiled an ambitious plan to Rapidly Reduce Steel Production in the next few years in a bid to help solve the worsening pollution crisis, which is now the No 1 concern for many Chinese citizens. In his first public appearance as the new Premier last year, Li Keqiang said fixing the air quality would be the top priority. This is music for the Indian Steel sector which is struggling hard to cope with cheap Chinese Imports. The investors are therefore, suggested to buy the steel stocks in BULK and keep holding, for some mind-boggling returns in the short term]
Sunday, 25 January 2015: Escalating cement prices are affecting the real estate sector, as the input cost has increased substantially. The Builders Association has demanded that the state curb prices of cement and other construction materials, to avoid various construction work coming to a halt.
What is the present scenario?
Coupled with the short supply, the price of cement has increased by around 30% over the past month. Apart from cement, the price of steel has also witnessed an upward movement.
The price has risen to Rs.360 per 50 kg, as against Rs.260 per 50 kg last year. Dewang Trivedi, president, Builders Association of Navi Mumbai (BANM), alleged that the mismatch between demand and supply has been created by putting the manufacturing of cement on hold for a brief period. "The poor supply has pushed the prices up," he said.
In what way will construction work be hit?
According to developers from city, if the situation continues, construction work is likely to come to a halt. "The input cost has increased beyond limit, with the rise in cement price as well as other construction materials," said Trivedi.
Most of the projects' costs are estimated at the current market price, with a little cost escalation. However, the current price rise will put off the ongoing construction. "At this price, construction will come to halt as developers will wait for the price of cement to drop. This situation is not good for the industry, and people who are looking for affordable homes," said a developer.
What have the builders called for?
The association has demanded the state government to control the prices. "The state machinery needs to take measures to prevent the cartel of cement producers and marketing being formed, as it will directly impact the ongoing construction work," added Trivedi.
The BANM president asked: "When there has not been any major changes, then how can the price rise by over 25%?"