HomeNewsCement demand falls in May, but price remains stable

Cement demand falls in May, but price remains stable

Localised lockdowns subsequent to Covid-19 second wave became widespread in May covering almost the entire nation as compared April when it was limited to few states only. As a result, demand for cement too impacted more adversely in May than in April as the economic activities were scaled down substantially. Retail sales were more affected than the institutional sales because of the lockdown. This is in contrast to last year when the retail sales were less impacted due to demand from rural India and small towns. A quick estimates indicate that demand has declined 40–60% across regions in May as against 20–30% decline in April.

Despite the fall in demand cement price sustained higher levels though some regions showed signs of weakness. Cement prices witnessed a strong uptick in South where it moved up by more than 6%. However, East (-2.1% MoM) and Central (-2.9% MoM) witnessed a decline in cement prices.  In Western region cement prices showed a flattish trend.

Cement demand has been most impacted in North due to the reverse migration of labour and was down 60% as against 40–50% decline in other regions. Further, cyclones Tauktae and Yaas in West and East India, respectively, have led to the loss some working days and thus dragging down volumes in May. Demand in East was strong up to April and has only weakened in May due to the lockdowns and impact of cyclone Yaas. Demand was down 40% in East.

However, clarity about demand scenario in June has not yet emerged as states have differed in relaxing the lockdown restrictions. While Maharashtra will continue with restrictions for some more time, Delhi may go for relaxation in stages. Also, Monsoon rains may keep the construction activities at low levels during the June which will also affect the cement demand.

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