A survey of a cross section of the dealers reveals that cement prices have gone up by 5-8% all over the country in May. Price was hiked despite the demand condition was poor. Cement manufacturers have reportedly resorted to price hike to cover their high fixed costs.
According to dealers, price was hiked by 14% MoM in the Southern market whereas in East and Central India it has gone up by 8%. In West and North price was increased by 5% and 4%, respectively. The dealers are also of the opinion that price hike is not sustainable as its not supported by demand. Though most of the cement manufacturers commenced their operations in April, capacity utilisation during the month was in low single digit which has gone up to 20-25% now. Going by the present trend, cement consumption in the first half of the current year is expected to fall by at least 25%. However, the second half is likely to see revival in the demand due to infra work, housing and rural demand. Second half is likely to see 6-7% growth in cement demand YoY basis.
Reverse migration of workers has affected availability of labour for various construction projects which in turn has affected the demand for the cement. The trend is likely to remain so till the end of Monsoon in September and thereafter it is likely to pick up gradually.
Meanwhile, Reliance has reduced pet coke prices by 18% MoM to Rs5892/t. In May-20, imported coal prices was flat MoM which is a great relief for the cement producers.