Jul 2021 , by , in Realty+ Connect


Real estate governing bodies CREDAI and NAREDCO have urged the government to intervene in regulating the prices of construction raw materials amidst the ongoing pandemic that has hard hit the real estate sector second time around. The Builders’ Association of India (BAI), has demanded immediate appointment of a regulatory authority for the cement and steel industry to curb what they call “ill and unethical practices.”

Many a real estate and infrastructure projects have got stalled or delayed as cost of iron, steel, copper, cement soars amid pandemic crisis. Also, the prices for bitumen, plastics, man-made polymers and resins, used in piping and insulation have been rising rapidly over the past few months. Copper and aluminum prices have also increased.

According to the developers, in the last 3-4 months, the iron prices have increased by Rs 20,000 per ton, which is almost a 50% increase. Similarly, cement costs increased 50-70% from 2020 to 2021. At present, the retail price of cement is Rs 420 per bag, whereas it was Rs 280 in FY20. The price is expected to increase in the coming months.

Contractors voicing their concerns have expressed that steel and cement are some of the major construction materials used in all segments of the industry and as contractors mostly work on fixed rate-fixed time basis, the frequent rise in prices will make it difficult for them to survive.


As per industry reports, domestic steel prices are high due to higher price of iron ore and its strong demand coming from domestic market as well as export market like China and other countries. Moreover, steel production halted as government mandated steel plants to divert oxygen for medical purpose amid the Covid second wave emergency faced by various states. Lot of steel companies therefore kept production on hold such as Tata Group, Reliance Industries, JSW steel and many others.

As per cement manufacturers, the disruption in production due to limited workforce and hike in fuel prices have been the major contributors for the prices to soar.

SAIL, JSW Steel, Tata Steel, JSPL and AMNS India are the leading steel-making companies in the country which jointly contribute about 55 per cent to India’s total steel production As per the manufacturers, the cost rise is market driven and is the result of global steel prices moving up owing to a spike in the cost of raw materials such as iron ore, gone up by Rs 4000/tonne. They also point out that domestic steel prices are at 20-25 per cent discount to international prices. “Flat steel products, which are benchmarked globally, are still at discount prices in India compared to the US, Europe,” informed Jayant Acharya, Director, Commercial and Marketing Operations at JSW Steel Ltd.

Cement sector witnessed a steep hike in the prices of input materials like fuel and petroleum products as well as packing costs. The cement companies expect cement prices to continue to go up if the input cost continues to rise. The production cost has seen an adverse impact due to the increased cost of power & fuel and freight cost. Power & fuel costs have gone up by 4% MoM in March 2021. Diesel prices are up 9% QoQ in Q4FY21.

Both pet coke and imported thermal coal prices are up 50% in the past six months. The cement companies have so far managed to mitigate its impact due to the availability of substantial inventory at their disposal. However, that comfort is gone now. It has exposed the companies to the volatility in raw material prices. Vice Chairman and Managing Director, India Cement Ltd, N Srinivasan had stated, “Variable cost for the quarter was high. If there is an increase in the input cost, we will have to increase the price.”

Realizations across Pipe manufacturing companies too have increased led by higher raw material (PVC) cost. Global supply constraints on the back of shutdown of plants in the US, have resulted in surge in prices. Small and regional pipe manufacturers, who are still struggling with working capital challenges, are facing issues sourcing polymer at a high rate and thus, large companies with better balance sheets are gaining market share of smaller companies as well in the market.

The real estate firms have alleged cartelization and unfair trade practices by the cement and the steel manufacturers by imposing a sudden increase in their selling price and have asked for government intervention through relevant ministries


In a bid to contain runaway steel, metal and other raw materials prices in India, the government had reduced import duties on a host of items. Further, safeguard measures like anti-dumping and countervailing duties were revoked on some products including those from China. Exports of metals have been stopped, till the problem of excessive prices and availability in market are resolved.

Customs duty on iron and steel melting scrap, including stainless steel scrap has been removed entirely up to March 31, 2022 while on primary/semi-finished products of no alloy steel and on long products of nonalloy, stainless and alloy steel, it has been reduced from 10% to 7.5%. Duty on raw material used in manufacture of cold rolled grain oriented steel has also been entirely removed while import duty on copper scrap has been halved to 2.5%.

“The announcements made for the steel sector in are largely around making steel available in the right quality and quantity at competitive prices to enable speedy infrastructural development planned for the country. Reduction in customs and anti-dumping duty on steel imports and zero customs duty on scrap imports will benefit the secondary steel manufacturers to supply steel for construction of roads, ports and bridges and add to a more cost effective supply base for steel.” Commented Saurabh Bhatnagar, Partner and National Leader, Metals & Mining, EY India.


As of June 2021, leading domestic steel makers have hiked the prices of Hot Rolled Coil (HRC) and Cold Rolled Coil (CRC) by up to Rs 4,000 and Rs 4,900 per tonne, respectively, HRC and CRC are flat steel used in construction. After the price revision, a tonne of HRC will cost Rs 70,000-71,000 while the buyers will get CRC at Rs 83,000-84,000 per tonne.

The price of polyvinyl chloride (PVC) resin, a key raw material in making pipes, continues to head northward. At ₹129 per kilogram, it has almost doubled compared to last year. With effect from 1 March, PVC price has been hiked Region May-20 April-21 May-21 East 331 341 340 West 360 360 358 North 362 340 342 Central 360 343 340 South 388 367 383 All-India 361 352 355 Cement Price `per 50 kg bag Price Support by ₹6 a kg, which is a 5% jump from its previous price, ICICI Securities Ltd said in a recent report. It should be noted that this is the third PVC price hike in Q4FY21, and totals to more than ₹12 a kg or 10.2%. In Q3FY21, prices were raised by ₹26, or 28.5%.

A surge in demand, lagging supply, and renewed focus on carbon emission reduction in China have led to a sharp rally in base metal prices that have rallied sharply, with aluminum, zinc, and copper trading at multi-year highs. With the near-term outlook on pricing remaining strong due to a tight demand-supply situation and fears of production cuts in China, metal companies are likely to see prices rising going forward.


Real estate and infrastructure are the backbone of Indian economy in terms of their GDP contribution as well as employment. The real estate sector particularly has been battling unsold inventory on one hand and unfinished projects due to lack of funds on the other. High raw material costs make projects financially unviable and are causing distress amongst developers. On the other hand, as many as 462 infrastructure projects reported a cost overrun in May 2021, one of the main reasons being cited are increasing costs of construction materials.

High prices of cement, steel and other raw materials have been a serious concern and many industry leaders and Ministers have expressed their concern. Among them, Minister of State for Road Transport and Highways, Shri V K Singh and Minister for MSMEs and Road Transport and Highway. Nitin Gadkari have taken up the matter of irrational upsurge in prices and with the PM.

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