Connect with us

Concrete

A volatile market leads to hedging of price

Published

on

Shares

Jatin Shah, Chief Technical Officer and Managing Director, TDD, Colliers India, discusses the various aspects of the construction business that are getting affected by the fluctuations in cement prices and input costs.

How has the rise in cement and building materials costs impacted your business?
Cement price as per last report has risen by about 9 per cent in October 2022 compared to March 2022. Other components like steel, aluminium, copper etc., which are significant contributors
also remain volatile. The construction cost has gone up due to various factors like labour cost and cost of transport coupled with material
price volatility. This remains a concern for the developer, contractors and will continue to impact the industry.

As the costs are expected to remain volatile for a few more months, is there any change in your strategy or approach towards the launch of new projects?
The volatile market will impact developers.
The launch of projects by grade A developers will not be impacted as these developers do command a premium. However, the projects in tier II cities and grade B developers will witness a restraint unless there is some stability in the market, since they operate on thin margins. Apart from on-going Russian-Ukraine conditions, we may observe challenges due to a new surge in Covid-19 infections in some countries.

Tell us about the impact on the timely delivery of developer projects.
Developers (grade A) will continue to deliver their projects. Thanks to RERA and incremental involvement of end buyers and investment from funds, projects will be delivered with only small delays. The impact, as mentioned earlier, will mostly be on the grade B developers or the projects planned in tier II cities where possibly a wait and watch policy may happen.
How has consumer behaviour changed with a change in property costs? Do you expect the demand to decrease?
The residential sector has seen a good run
since the pandemic. Sales momentum has remained intact despite the rise in construction costs and property prices, led by robust demand for home ownership and schemes offered by developers during the festive season. However, led by increased property prices and rise in interest rates, we might see some moderation in demand in the short term. The demand might see a drop in affordable and mid-segment, while the demand for the luxury segment is expected to remain firm.

What is the major challenge that you have come across with the rising costs and how are you combating the same?
A volatile market leads to hedging of prices.
We recommend the developers to remain watchful for bulk procurement and approach projects with just-in-time approach, tweak contracts to bring in more materials linked to basic prices and take contractors into confidence. The transparency between developer and contractors at this stage will insulate both from the issues of fluctuating prices. Additionally, the selection of material, of suppliers and vendors should be reviewed holistically and not only be driven by the ‘lowest price’ concept.

How do you envision the future of real estate development and consumer behaviour with the rising cost of cement and other construction materials?
Real estate investments will continue to remain in focus and a preferred investment vehicle. Focus may shift to investments in grade A assets or projects by grade A developers where end buyer / user has the confidence on projects being
completed in time and with quality. While developers are expected to step ahead with caution, consumers might also adopt a wait and watch approach for decision making.

-Kanika Mathur

Continue Reading

Concrete

CCU testbeds in Tamil Nadu

Published

on

By

Shares



Tamil Nadu is set to host one of India’s five national carbon capture and utilisation (CCU) testbeds, aimed at reducing CO2 emissions in the cement industry as part of the country’s 2070 net-zero goal, as per a news report. The facility will be based at UltraTech Cement’s Reddipalayam plant in Ariyalur, supported by IIT Madras and BITS Pilani. Backed by the Department of Science and Technology (DST), the project will pilot an oxygen-enriched kiln capable of capturing up to two tonnes of CO2 per day for conversion into concrete products. Additional testbeds are planned in Rajasthan, Odisha, and Andhra Pradesh, involving companies like JK Cement and Dalmia Cement. Union Minister Jitendra Singh confirmed that funding approvals are underway, with full implementation expected in 2025.

Image source:https://www.heavyequipmentguide.ca/

Continue Reading

Concrete

JSW Cement gears up for IPO

Published

on

By

Shares



JSW Cement has set the price range for its upcoming initial public offering(IPO) at US$1.58 to US$1.67 per share, aiming to raise approximately US$409 million. As reported in the news, around US$91 million from the proceeds will be directed towards partially financing a new integrated cement plant in Nagaur, Rajasthan. Additionally, the company plans to utilise US$59.2 million to repay or prepay existing debts. The remaining capital will be allocated for general corporate purposes.

Continue Reading

Concrete

Cement industry to gain from new infrastructure spending

Published

on

By

Shares



As per a news report, Karan Adani, ACC Chair, has said that he expects the cement industry to benefit from the an anticipated US$2.2tn in new public infrastructure spending between 2025 and 2030. In a statement he said that ACC has crossed the 100Mt/yr cement capacity milestone in April 2025, propelling the company to get closer to its ambitious 140Mt/yr target by the 2028 financial year. The company’s capacity corresponds to 15 per cent of an all-India installed capacity of 686Mt/yr.

Image source:https://cementplantsupplier.com/cement-manufacturing/emerging-trends-in-cement-manufacturing-technology/

Continue Reading

Trending News