Did steel producers form into a syndicate on the lines of cement manufacturers? Will the syndicate of steel firms jack up the prices of steel to Rs 90,000 a tonne? What is the reason behind the steel units jacking up prices at once? What is going to be the impact of this on the realty sector? Does it contribute to an increase in cost of construction forcing realtors to pass on the burden to consumers?
The realty sector is going through upheavals with the drop in sale of properties. If one material producer after other increases prices of materials, the cost of construction will increase the burden on the buyer, who will shy away from making a deal.
For reasons best known to the steel producers, they have been increasing the prices almost every other day. Perhaps the boom in the realty sector could be one of the reasons! Two weeks ago, re-rolled steel, which is described as quality steel, commanded a price of Rs 58,000 to Rs 60,000 per tonne. Now it rose to Rs 77000-78000 a tonne, registering a hike of 35 per cent in 10 days. If the increase ranges between Rs 17000 and Rs 20,000 per tonne, one should spend Rs 1.70 lakh to Rs 2 lakh more to buy 10 tons. One should pay an additional Rs 17 lakh to Rs 20 lakh to buy 100 tons of steel. It would put a lot of burden on the realtors and developers. Ultimately, the increased cost would be passed on to the buyer.
A tonne of steel price increased from Rs 60,000 to Rs 90,000 in a month or 45 days period. It was atrocious. The realtors and developers’ associations should take a joint action in this regard to put pressure on producers to decrease the prices. Otherwise, they should take up the issue with steel companies separately to arrive at a mutually agreed upon price to supply steel to realty firms. Over 100 realty developers buying steel from a common supplier is not a joke. However strong a syndicate could be, it would succumb to pressure if all construction firms come onto a common platform to negotiate a better price for them.
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