Construction material price has risen due to several factors, including rupee devaluation against the dollar, hike in petrol prices, interest rates, and freight costs. As a result of these changes, cement prices have gone up from Rs 480 per bag in March 2020 to Rs 750 at present. The price of steel bars has also increased rapidly from 104,000 per tonne in March 2020 to Rs 200,000 per tonne today. The increasing cost of cement and steel has made construction costly. Steel and cement are key ingredients in the construction process. According to experts, steel bars and cement hold 23% and 18-20% cost share in constructing a high-rise project, respectively.
The import of steel bars has plunged from 2.7 million tonnes to 2.1 million tonnes as international steel prices have gone up from $353 to 585$ for an average per tonne. This also implies that the working capital requirements of steel companies have risen. Companies with limited access to cash flow have to struggle to survive while large players remain at an advantage.
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