Home News Cement manufacturers revise demand growth downwards

Cement manufacturers revise demand growth downwards

Cement manufacturers were hoping for post festival revival for the cement demand and with that hope they had hiked prices by Rs 10-15/bag across the regions. However, demand growth was not on expected lines and manufacturers had to roll back part of the price hike towards the month end. In the South price hike was the highest and so roll back too was steepest.

The construction ban in Delhi and sand unavailability in Kota persist and as such cement manufacturers in the North are keeping their fingers crossed about the revival of demand. Further, with the winter season beginning (short days, more fog in Punjab/Haryana) demand may be impacted.

In the Central region, demand continued to remain weak due to sand unavailability and subdued real estate demand. Going forward, manufacturers don’t expect much improvement in the demand scenario. However, they also feel prices may be held on at November level.

In the Western region, demand from infrastructure had slowed due to the prolonged monsoon, and is expected now to resume. Manufacturers expect revival of construction activities with the withdrawal of Monsoon and price may remain at November level. It should be noted that prices at Surat, Aurangabad and Nagpur were at the October level.

However, in the East, with the monsoon and the festival season having ended, demand is rising. However, the liquidity issue may spoil the entire show. In November prices remained at October level. However, going forward  there is scope for prices to correct by Rs 5-10/bag due to increased competition to meet year end targets.

In AP/Telangana, the Rs80/bag hike in the first week of November was rolled back to a hike of only Rs30/bag. In Kerala and Tamil Nadu, prices were held at the October level as demand was impacted by floods and slow-moving infrastructure projects. In Bangalore there was moderate hike in the price.

The second quarter of the current financial year saw a volume decline of 1.1% due to slowdown in government infrastructure-led demand and a heavy monsoon. Going forward, further softening in petcoke, coal and diesel prices is expected to benefit cement companies in forthcoming quarters. The demand outlook for the second half is positive as the execution of government infrastructure and housing projects improves. However, demand growth for the cement industry for the whole year has been trimmed down to 0-5%. Earlier, following the first quarter performance, cement manufacturers were hoping for 6-9% growth in volume for the industry for the whole year.

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