REPORT - INCREASE IN REBAR RATES AND ITS IMPACT ON CONSTRUCTION INDUSTRY
1. INCREASE IN REBAR RATE AND ITS
IMPACT ON CONSTRUCTION
INDUSTRY
A REPORT BY DVR CONSULTING
2. INTRODUCTION
India is the second largest producer of crude steel after China
and has seen a tremendous growth both in consumption and in
production of steel. However, production of steel has seen a
decline during FY 2021. For the first time in the past several
years, India’s production of finished steel has plummeted below
its consumption.
As per the ministry of steel – April 2021 reports, both
production and consumption of steel has fallen by more than
20% from the respective levels of Mar 21.
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4. CONSTRUCTION & INFRA
INDUSTRY
As per the CRISIL report “steel in construction & infrastructure 2021”,
Building & Construction industry accounts for 35-40% consumption of
total steel production and infrastructure industry accounts for 25-30%
consumption and that is expected to grow by 5-6% and 8-10%
respectively. To keep up with this demand, India needs to ramp up its
production level.
If we monitor the trend of Iron ore, rates have increased by almost
25% in Apr 2021 from Mar 2021.
This increase in rate is mainly because top producing states like
Odisha and Chhattisgarh have not increased their supply. Few mines
remain unauctioned even after the revision in MMDR act, coupled with
various other factors like Covid-19 second wave. It is expected that
these rates would increase at least for the coming three quarters as
China has ramped up its economic activity thus manipulating the rates
of imported steel by a huge margin.
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6. STEEL CONSUMPTION
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TYPE OF
INDUSTRY
STEEL
CONSUMPTION PER
BUA
APRIL-20, STEEL
IN LACS (STEEL
RATES TAKEN AS
45 RS/KG)
APR-21, STEEL
IN LACS (STEEL
RATES TAKEN
AS 55RS/KG)
Commercial
project
7.25 Kg/sqft 3,262.50 3,987.50
Residential
Project
4.5 Kg/sqft 2,025.00 2,475.00
Hotel Industry 8 Kg/sqft 3,600.00 4,400.00
Data Center 10 Kg/sqft 4,500.00 5,500.00
(For a project of BUA 10 lacs sqft, steel consumption taken in average, brands of steel JSW)
7. INCREASE IN STEEL CONSUMPTION FROM PREVIOUS
YEAR
20XX 7
- 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 6,000.00
Commercial project
Residential Project
Hotel Industry
Data Center
Apr-21 Apr-20
8. AREAS OF FOCUS
Solid material management coupled with proper planned
project management might help builders and developers from
spending few extra Crores due to the increase in steel rates.
For the ongoing projects, it is advisable to factor in
escalation in steel prices before-hand and update budgets
accordingly and plan consciously for future steel
procurement.
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