Real estate developers want steel price hike probed

April 11th, 2008 - 6:00 pm ICT by admin  


Mumbai, April 11 (IANS) Real estate developers here Friday demanded an inquiry into the rise in steel prices and warned that if the prices were unchecked, plans for the Commonwealth Games 2010 would be hindered and would hit the residential construction business. Members of the Builders Association of India (BAI) met here and sought a probe by the directorate general of commercial intelligence wing to ascertain the reasons behind the “unprecedented steel price increase from 2004 till March 2008 and more specifically after the Union Budget 2008″.

Said Mahesh Mudda, chairman of BAI’s Mumbai chapter: “The northbound steel prices will act as a clampdown on the grandiose plans for the Commonwealth Games 2010. Moreover, not many know that CPWD (Central Public Works Department), the key authority involved in the construction work for the games, has not received any bid for two of its tenders floated in the last 10 days.”

Mudda said that at a BAI meet held last week in Delhi representatives of various builders’ associations, including Confederation of Real Estate Developers Association of India (CREDAI), Construction Federation of India (CFI), Construction Industry Development Council and National Highway Builders Federation (NHBF), were unanimous that steel firms were “arbitrarily jacking up the prices”.

According to most builders, the cause of the “arbitrary control” over steel prices lies “in the fact that there are five steel plants controlling 65 percent of the total steel produced in the country and they have an association called Indian Steel Alliance, through which they control pricing.”

Mudda also pointed out that the construction industry consumes just 33 percent of the total steel produced indigenously.

“If you look at the five major steel manufacturing plants, you find that only three of them produce steel bars, rods and structural steel called ‘long products’. And all of them import the balance requirement of coking coal from Australia, Africa, Indonesia and other countries. This means that while they have different production costs, the sale price strangely moves on the same wavelength,” he said.

“Herein lies the contradiction in the steel lobby argument, which states that price jump of ‘long products’ is due to a mismatch between demand and supply caused by an increase in housing activity. The fact is that while the National Highways Development Project has been going on since 2000, the construction industry galvanized into action only from 2002,” Mudda noted.

“We feel that if corrective steps are not taken immediately by authorities such NHAI, railways and CPWD, then the virus of non-tendering may spread across the country. And with cement prices also going high, coupled with a shortage of other construction materials, it is the common man who will pay the price as their dream home will remain a dream,” Mudda added.

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