Coimbatore: The price of TMT steel, a key raw material in the construction sector, has risen by 20% this month compared to last month, raising concerns about a slowdown in construction activities, including housing projects, according to builders’ associations.The price of steel has increased by ₹10 to ₹12/kg this month compared to last month, leading to higher construction costs than initially planned, said a Coimbatore-based builder.The price per tonne has increased from ₹62,000 to ₹72,000. Although there has been no major change in the prices of cement and bricks, the sharp rise in steel prices has compelled builders to revise project estimates. The increase translates to nearly ₹50 per square feet. Since price escalation of around 2% to 5% often occurs by the time a project is completed, builders say it becomes difficult to maintain credibility with clients. He further noted that such price hikes are commonly seen during this period due to the financial year-end. Alleging that the price rise is artificially triggered within the domestic market, builders have been urging the central government for several years to constitute a separate council to regulate and control construction material prices. They point out that just as regulatory bodies like RERA oversee and promote transparency in the construction sector, a government-led council comprising officials could help monitor and control raw material price fluctuations. This, they say, would safeguard builders’ credibility and protect customers from financial strain. “Since small companies operate with limited resources, these price fluctuations significantly affect profit margins,” said N Maruthachalam, a builder and engineer from Coimbatore. He added that unpredictable pricing makes it difficult for small firms to accurately estimate project costs during the bidding stage. He further explained that if prices rise after the initial project estimation, it becomes challenging to justify the additional cost to clients. For instance, in a 1,000 sq. ft. project, if three tonnes of steel see a price increase of ₹30,000, clients may consider it a relatively small amount. However, when such adjustments occur across four projects, it could result in a loss of nearly ₹1 lakh in profits for the builder, ultimately leading to delays or slowdown in construction activities. Recently, there has been a significant increase in steel prices. Since steel is one of the primary raw materials in the construction industry, any fluctuation in its price has a direct impact on the overall project cost. This increase has a greater impact on ongoing projects, especially those operating under fixed-price contracts, where contractors are compelled to absorb the additional cost. It also necessitates revisions in budgeting and cost estimates for upcoming projects, which may lead to delays in clients’ decision-making processes. In the current scenario, the construction industry is closely monitoring price trends. If the increase continues, it may lead to the implementation of escalation clauses, renegotiation of contracts, and a marginal rise in property prices in the long term, said Ramyaa R Senthil, president-Cebaca, Coimbatore builders and contractors’ association.
