Cement demand lowest in 6 months on poor monsoon

Hit by a weak monsoon, the growth in cement demand in August may have fallen to as low as 9 per cent, according to the Cement Manufacturers’ Association (CMA). This will be the lowest growth in six months.

The decline in demand from rural and semi-urban regions took its toll. It was the surge in demand from these regions that had put the cement industry back on track in November last year.

Hari Mohan Bangur, president CMA and managing director of Shree Cement, told Business Standard, “Demand in August has been poor, invetory build-up at most of the godowns. We expect despatch growth for August to be 9-10 per cent.”

It would, in actual numbers, mean a despatch of around 14.5 million tonnes during the month. This volume of despatch is lower by 1.5 million tonnes compared to the first few months of the current financial year.

The industry’s August statistics are expected next week.

An industry analyst with a domestic broking firm said, “Demand is low in August, resulting in further moderation in cement prices across the country.”

She further added that at first it was lack of rain which impacted rural sentiments and then, upon revival of rain in some regions, construction activities were hit.

According to Vinod Juneja, managing director of Binani Cement, the growth expectation could be worse in August. “We see despatch growth to be below 9 per cent as rural demand is showing a downtrend. Though we have been able to sell off our production, we resorted to cut our prices during the month,” said Juneja.

Another section of industry analysts said that 9 per cent growth would be far below their expectation of over 12 per cent growth.

After two years of witnessing stable prices during monsoon (generally cement is available at discount), industry had to cut prices. Across the country, on an average, there was a cut of Rs 5-10 per 50 kg bag.