Stuck projects paint grim picture for steel demand

Demand for steel and cement remained muted in fiscal 2014-15 due to stalled projects in the infrastructure and real estate sectors.

Steel makers are worried that stagnant demand and rising imports are putting pressure on costs.

India’s consumption of total finished steel grew 3.1 per cent in 2014-15 at 76.35 million tonnes. This is while total availability (including imports) of steel grew 8.3 per cent at 94.37 million tonnes.

According to the Centre for Monitoring Indian Economy, as of March 31, 146 projects, with an investment of Rs. 82,406.7 crore, remained stalled primarily due to unfavourable market conditions and lack of promoter interest.

CMIE said the real estate sector was the worst hit with 34 projects worth Rs. 37,300-crore investments being stalled. Of these, 24 were housing construction projects.

“More than 30 projects pan-India have been stalled over the past year or so. The delays are because of a combination of factors, including slowing sales, mismatch between pricing and market’s affordability, rising cost of finance for the developers, and wrong product offerings,” said Anuj Puri, Chairman and Country Head, JLL India.

“The most heavily impacted sector has been residential, but retail real estate deployment has also been hit in cases where a perceptible lack of retailer activity has caused projects to stall,” he added.

“Domestic prices remain around 10 per cent higher than the landed cost. While this is expected to reduce due to the rise in price of Chinese steel, there needs to be some relief in terms of an import duty hike,” said an executive at a Mumbai-based steel firm.

“Prices rising on account of higher demand will take time as the stalled projects have to get going,” the official added.

JLL India’s Anuj Puri said that the real estate and infrastructure sectors are waiting for clarity to emerge on the Land Acquisition Bill. “The sector has welcomed several positive schemes but these now need to be implemented to ensure on-ground progress. Likewise, the engine of infrastructural development also needs to be kick-started, most large infrastructure projects are struggling with land acquisition,” he said.

  Similar Posts

Share it