A steep rise in construction materials prices has resulted in cost uncertainty on a significant scale in the construction industry. According to JLL’s report, the steel price has increased by 45% from Rs 45,000 per metric tonne (MT) in Q1 2020 to Rs 62,300 per MT in Q4 of 2021. Steel price has been increasing rapidly post Covid-19 due to supply chain uncertainties, rising raw material prices, and high global & domestic demand.
The cement price has increased by 38% since Q1 2020, which has raised the cost of other construction raw materials like concrete and cement blocks. In two years, cement prices have increased by Rs 2,000 per tonne, i.e., from Rs 5,120 per MT to Rs 7,130 per MT.
Aluminum has seen a price increase of 58% since Q1 2020. With global recovery and subsequent demand for aluminum, it is predicted to go even higher in the upcoming quarters as the supply may not be meeting the demand. If the cost of aluminum was Rs 1.13 lakh per MT in Q1 2020, it rose to Rs 2.03 lakh per MT in Q4 2021.
According to the report, the labor cost has gone up by 10-15%, besides the regular increase, due to the knock-on impact of Covid protocols and the costs associated with it. This includes costs related to compliance to new protocols like RT-PCR tests, idle time until test results, increased accommodation space for the same amount of labor, quarantine facility, and sanitation measures. Moreover, there is a shortage in labor supply, forcing the contractors to pay higher wages to complete work.