Steep steel price hike under focus as cartelisation fears gain ground

Jamshedpur: Steep rise in the price of steel in the recent times is causing concern across the board as construction sector gets impacted at a time when economy is struggling to stage a spring-back from coronavirus pandemic impact.

Even the government seems to be concerned at the quantum of hike in the steel prices.

No less a man than Nitin Gadkari, the Union Minister for Road Transport and Highways, while speaking at a programme, expressed fears of cartelisation among the players in the cement and steel sectors.

Gadkari expressed his apprehensions saying in clear words that cement factories are exploiting the situation and this is not going to serve the interest of the country.

Gadkari even said that the government is likely to unveil big infrastructure projects worth more than Rs. 100 lakh crores during the coming 5 years and if the price of cement and steel is at such a high level, the government would find it difficult to implement those projects.

He even questioned the rationale behind the steep rise in the prices of steel, saying – “Steel companies have their own ore mines and even the prices of labour, power and other raw materials have not risen. It is difficult to understand why the rates should increase.”

It has been reported that steel prices have risen by more than Rs 20,000 during the last 6 months, while the prices have almost doubled if compared to the prices of last year same time.

The construction sector has to cope with this price rise. Normally, 15% of any project’s cost is spent on steel, while in a few projects it may even reach up to 30% or more.

Experts feel that if the steel prices continue to rise in an unbridled fears, government may come out with steps to rein in the prices with some sturdy policy interventions.

With a slew of infrastructure projects likely to be in the pipeline and the high price line, things have started looking up for both steel and cement sectors.

However, there are rumblings about possible cartelisation in both the sectors.

It would be interesting to see how the government deals with the steel rise in prices.