While the monsoon is still six weeks away, cement companies have started slashing prices across the country attempting to boost the tepid demand expected towards the end of the busy season. This is good news for real estate and infrastructure companies which will heave a sigh of relief as their input costs come down.
According to cement stockist and president of dealers association, in the western region, prices have declined Rs 10-15 per 50-kg bag while in the north and south, the prices have declined by Rs 8-10 per 50 kg bag. In the eastern region prices continue to be stable.
Vinita Singhania, managing director J K Lakshmi Cement, told Financial Chronicle that the demand in April has gone absolutely haywire due to several reasons. “While there is a shortage of labourers due to which there could be a slowdown in construction activities certain infrastructure projects have also not come to place. Prices have started falling due to these reasons. This year we are expecting growth of around 6-7 per cent as compared to double digit increase indemand in previous years. It is much below our expectations.”
A senior official from Ambuja Cement stated that before the onset of monsoon labourers go back to their native places and construction activity slows down. Due to labour shortage construction activities has slowed down which may be the reason for decline in demand.
A senior official of cement manufacturers' association said that this year cement prices have declined even before the arrival of monsoon due to over-supply situation in the market. This year the price correction has come little earlier than expected as demand didn’t pick up in line with industry expectations. The price correction comes as the sector has not seen demand grow as per expectations in the peak season this year.
Looking ahead, Vinod Juneja, managing director, Binani Cement believes that prices will undergo further correction with the onset of monsoon.