Cement prices & Consumption decline in February -min
In February, cement prices in general saw a decline of Rs 5 per bag due to poor demand in North India. Poor demand was due to multiple reasons. For example, in Rajasthan, cement demand affected due to shortage of sand. It is reported that price of sand has gone up to Rs 100/cft in Rajasthan, which was less than Rs 30/cft before the ban on sand mining was imposed. However, good news is that sand supply in Bihar and Uttar Pradesh has improved substantially in February. In general, there was sluggishness in construction activity in North India in February partly because of non-availability of labour, which is a common feature few weeks before Holi festival. Also, in general there was less number of new projects commenced in the region during February. Strict implementation of overload rules for truckers in states like UP also affected the cement supply and its cost.
In Southern region, there was dullness in cement demand and price of the commodity actually went down by 2% in Telangana and Andhra Pradesh. In Karnataka too, not much action is taking place thanks to forthcoming Assembly elections. In Tamil Nadu availability/acceptability of M-Sand has given a new hope for the construction activity. However, with no new major government projects or housing projects in the private sector, cement demand remained sluggish in February.
Unlike other parts of the country, Eastern region saw good pickup in demand for cement in February. For example, in Odisha, brisk pace of implementation of Pradhan Mantri Awas Yojana has resulted in increased demand for cement which in turn pushed up the price for the commodity by Rs 5 per bag towards ened of February. In Bihar too, increased availability of sand has revived the construction activity which in turn resulted in improved demand for cement.
With housing activity picking up in Gujarat, demand for cement too was healthy in the state in February. However, first week of March saw some price cuts due to Holi and the normalcy is expected to return soon. Mumbai region saw a price cut of Rs 5-10 per bag in February due to aggressive pricing by some leading suppliers.
Though prices declined marginally in Madhya Pradesh towards the end of February, demand scenario was good in the state. However, seasonal labour shortage in March due to the crop cutting season following Holi is likely to impact the pace of construction marginally.
On an all India basis, cement price declined marginally in February which is a rare phenomenon in recent months. It may be partly attributed to shortage of labour on the eve of Holi but also subdued construction activity was evident.