Construction costs rise as cement and steel prices rise again
Kannur: Much to the chagrin of people looking to build, renovate or expand homes and shops, the prices of building materials, including cement, steel and iron, have risen again.
Rising prices for coal and petroleum products would be the main reason for such an increase. A clear picture of the price increase can be measured by the fact that ‘A’ grade cement now costs Rs 525 per bag, almost Rs 35-40 more than its selling price until recently. The price of a bag of ordinary quality cement has now reached Rs 460 compared to the previous cost of Rs 410.
But in order to offset the effects of rising prices to some extent, the cement factories have asked dealers to reactivate the rebate system. A discount of Rs 65 will be given per bag.
Also late last year, prices for building materials had become more expensive after construction resumed after major COVID-19 shutdowns. The shortage of raw materials due to production cuts in factories or mines following the unavailability of labor and transport has been blamed for the rise in prices.
Limited offer behind the peak
The President of the All Kerala Steel Traders’ Association, KM Muhammed Sageer, said most of the iron ore production centers are not operating at full capacity. He further pointed out that the rise in prices of building materials was not due to higher consumption of products by the public, but to reduced availability of materials.
Henceforth, the rise in prices is common to all categories of cement and steel products. The price of TMT steel is now double that of last year. The cost of pipes has increased by 25 percent.
Soaring fuels, coal prices
Coal is a raw material in the production of steel. The country is now facing a severe shortage of coal, which is negatively affecting steel production.
Compared to previous years, coal production has fallen by 76 percent, which is devastating.
Another setback of the industry, the importation of coal into India was affected by the soaring prices of the product on the international market.
Another factor in the rise in prices of building materials is soaring fuel prices. The increase in fuel prices leads to a further increase in the transport of building materials.
The huge increase in iron ore exports from India has hit our domestic market leading to a shortage of iron and related materials.
Likely impact on Kerala economy
Soaring construction commodity prices will have a very negative impact on Kerala’s economy at a time when the state is slowly returning to normal after a protracted COVID-19 crisis.
Government intervention required
Governments should intervene immediately to control prices as they impose huge taxes on cement. The government withdraws 28 percent of the total price of cement under the GST. Central and state governments share the cement tax. The GST on the transportation of cement is 12 percent.
It is alleged that the government is reluctant to take steps to control the prices of building materials, as it gets a huge tax share from the sector.
Although the cement merchants went on strike demanding action to reduce the enormous price of the material, the government did not pay much attention to it. Only government intervention would lower the prices of construction materials such as cement and steel.