The document discusses the increase in rebar rates in India and its impact on the construction industry. It notes that steel production in India declined for the first time in years in FY 2021, falling below consumption levels. The construction and infrastructure industries account for over half of steel consumption in India. Iron ore prices have risen about 25% since March 2021 due to supply issues, and steel prices are expected to keep increasing over the next three quarters as demand from China also rises. The summary advises construction companies to factor in escalating steel costs and properly manage materials to avoid cost overruns on projects.

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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3. STELL TREND Y-O-Y
(SOURCES: STEEL.GOV.IN)
0
20
40
60
80
100
120
140
mnT mnT mnT mnT mnT mnT
FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
STEEL TREND
Finished steel production Consumption of Finished steel
Import of finished steel Export of finished steel

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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5. IRON ORE PRICE TREND
(SOURCES: STEEL.GOV.IN)

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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9. THANK YOU
DVR CONSULTING
DVRCONSULTING.LKO@GMAIL.COM
9818985642 I 7011986777
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