Cement prices fall due to weak demand
Delhi- From the past one year, demand for cement has been deteriorating. Consequently the price of cement had fallen significantly by the end of February which has been curbing the hopes of growth estimates for the March quarter.
Most of the cement firms have witnessed drop in quantity of cement sold in the year. Pan-India cement company UltraTech Cement Ltd registered a 4.5 percent fall in dispatches while JK Lakshmi Cement Ltd and Shree Cement Ltd reported fall of 5 percent and 16 percent, respectively.
Market and industry analysts are of the opinion that several reasons have hampered the growth of the product. Untimely rains in the month of February, Maha Kumbh festival that affected labour-availability and two-day nationwide strike, are some of the important reasons that paved way to the drop in sales volume.
A recent report by Religare Capital Markets Ltd estimates that the cement industry as a whole could register a 6-7% drop in sales volumes in February and a high-base effect during the next two to three months could moderate growth rates too.
In January, the industry witnessed a rise of 4 to 5 percent, which later dropped in February. The Eight Core Industries data from the ministry of commerce reports unstable production growth rates over the last quarter. Indeed, January registered a 6.6% contraction in production which led to fall in February sales.
The decreasing sales volume and softening of cement prices shows that the demand has been very weak. The price of cement was high in several regions from past one-two years. Except the eastern region, where the cement prices are usually high because of shortage of wagons and timely transportation, the prices have reduced from the high levels. Southern regions including Andhra Pradesh and Karnataka have also witnessed downfall in cement sales and prices.
According to dealers, the prices have come down following the Competition Commission of India’s order last year, which levied a huge penalty on firms that were allegedly maintaining lower production and supply to keep prices aloft.
However, the cement prices are likely to remain stable in the near term because lack of strong demand drivers like higher execution in realty sector and infrastructure, observe experts. Usually, the construction activity is at top during April-June quarter. Many commercial and residential projects are likely to come up. Therefore, cement prices along with the demand are expected to rise in the upcoming pre-monsoon period.
Click here for related forum discussion
Related Real Estate News:
Ultadanga flyover collapses in Kolkata
NHAI and KMRL to sign memorandum for Metro construction
Hike in Delhi Airport Metro fares
Image courtesy of luckypic at FreeDigitalPhotos.net
cement firms, cement industry, cement sale, cement sector growth estimates, Construction activity, demand for cement, industry analysts, JK Lakshmi Cement Ltd, price of cement, Religare Capital Markets Ltd, Residential projects, sales volume, Shree Cement Ltd, UltraTech Cement Ltd
Spot on with this write-up, I genuinely believe this web page needs a lot more consideration. I’ll in all probability be once again to read a lot more, thanks for that information.
You will discover some interesting points in time in this post but I don’t know if I see all of them center to heart. There is some validity but I will take hold opinion until I appear into it further. Superb write-up , thanks and we want additional! Added to FeedBurner at the same time
There is noticeably a bundle to understand about this. I assume you produced particular nice points in attributes also.