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The recovery in cement demand may be short-lived with construction activity slowing down on the back of monsoon peaking in most states.
Demand for cement in May and June was supported by a pre-monsoon increase in construction work and is not likely to be sustained going forward. Although demand picked up temporarily in May-end, it does not reflect any fundamental recovery in prospects, according to an ICRA study.
Domestic cement production which grew by 8.2 per cent in April slowed down further to three per cent in May, pulling down the overall growth rate to 5.6 per cent year-on-year in April-May 2013.
Coal price hike
Cement prices, which weakened during March and April due to low demand, saw some recovery from mid-May. The hike in cement prices was supported by pre-monsoon increase in construction, which provided an opportunity for cement companies to raise prices before the lean season set in.
The industry also increased prices to pass on the hike in coal prices by Coal India.
In Delhi, average wholesale cement prices increased by Rs 10 per 50 kg bag between April and June . Prices in some parts of south India such as Bangalore and Chennai also saw a hike of Rs 10-15 a bag in June .
However, in the last week of June, prices have come under pressure in North, West and East with cement prices declining by Rs 5-20 per bag in Delhi, Chandigarh and Ahmedabad markets, said ICRA.
> suresh.iyengar@thehindu.co.in
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