Tamil Nadu businessmen feel the heat of rising steel prices – Reuters


Express press service

CHENNAI: Railway entrepreneur Krishnappa Venkatesan is a worried man. With the price of steel changing daily, he struggles to source a large quantity of coils of steel for a project he has taken on. Ask him what the current price of steel is, and he angrily jokes, “It’s constantly changing. How can I give you a realistic number? »

Metal prices, which hovered around Rs 50-55 per kg before the start of the year, are now at Rs 80-85. Steel companies are eagerly watching prices before placing orders. While the price increase is linked to the Russian-Ukrainian war, many refuse to accept the theory and blame it on cartelization.

Interestingly, Russia is the world’s third largest producer of nickel, a key raw material used in the production of stainless steel. It is also one of the world’s leading exporters of iron ore pellets. Supply disruptions of these key ingredients have impacted steel availability. The impact has been such that infrastructure projects may soon become more expensive.

Venkatesan alleges that the rise in the price of steel is also not reflected in the Reserve Bank of India index. In the month of January, the price of steel rose by Rs 10,000, but in the RBI index, it was Rs 3,000, Vekatesan claims. He says work on many rail projects has slowed. The same is true for road contractors, as the price of bitumen has increased by 60%. A contractor working on a national highway project says the price of bitumen has risen due to rising crude oil prices around the world. However, he estimates that the state government will compensate at least 50% under the price overrun clause.

Similarly, sources from Chennai Metro Rail told TNIE that the tender fares were set earlier and the recent price hike may have an impact on the contractors. “If prices continue to stay higher, they could be a problem down the road,” the source said. A National Highways Authority of India (NHAI) said steel and bitumen prices are being watched. “We will adequately compensate the contractor if this gets out of hand,” he said. NHAI is implementing 38 projects covering 1,572 km in the state.

George Rajkumar, country chairman of Grundfos India, one of the biggest pump makers, says profits have fallen 3-4% this quarter. He wants the state to buy steel in bulk from sellers and resell it at an affordable price. Aditya Engineers MD K Sai Satya Kumar, who manufactures submersible pumps at Ambattur Industrial Estate, says MSMEs have also been hit hard. “I only have 15 days of steel stock left and it is difficult to buy raw materials,” he says.

Meanwhile, property developers have already raised prices by Rs 300 per square meter. “We raised prices and passed them on to consumers. Work on the sites has slowed down but has not stopped. Prices of all commodities, including cement, have gone up,” says Padam Dugar, chairman of Dugar Housing and chairman of the Chennai branch of the Confederation of India Housing Developers’ Associations.

Meanwhile, steelmakers held a meeting with state industries minister Thangam Thennarasu on Friday. Even cement prices were discussed. A senior MSME department official told TNIE that at the meeting, the government asked manufacturers to consider cutting prices. “They said they would think it over and come back on Monday,” the official added.

The South Indian Cement Manufacturers Association (SICMA) has denied that cement prices have risen abnormally. A press release from SICMA indicates that the price of cement for the current financial year is lower than that of the previous financial year. The price of cement is around Rs 400 (per bag). “The three main input costs in cement production are fuel, electricity and transport. The state being totally deprived of domestic coal (from Singreni or from the western coalfields) depends on imported coal for both fuel and electricity. Ironically, the cost of imported coal has increased four to five times over the past few months. Coal itself is becoming scarce,” a SICMA statement added.

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