BQ Survey: Coronavirus Stalls Cement Rebound, Worst May Be Yet To Come

Cement prices fell in March after rising for two straight months as the novel coronavirus outbreak stalled economic activity in a usually strong period of construction, according to a BloombergQuint survey.Pan-India prices declined by an average Rs 4 to Rs 345 for a 50-kg bag, according to 12 dealers surveyed in March. That was driven by sharp cuts in the south and east, while the west saw an increase and prices showed resilience in the northern and central regions.Labour shortage and a halt in construction activity in large cities hurt pricing power. That stalled the two-month rising streak in cement prices and threatens to worsen India’s prolonged economic slowdown..South: Trend ReversesJust when things started looking up for the region after a prolonged supply glut, prices fell after two months of increases. They were slashed by as much Rs 20 a bag due to unavailability of labour. That negated the most of the previous month’s hike, according to a dealer from Bengaluru. The average price in the region stands at Rs 315 a bag..East: Year-End Targets HurtThe eastern market also witnessed price cuts as dealers rushed to achieve the year-end targets, leading to discounted selling, according to two dealers surveyed by BloombergQuint. The average price in the east is Rs 310 for a 50 kg bag..North, Central India: Prices SteadyCement prices held steady in the northern and central regions, according to five dealers surveyed across states. In the north, UltraTech Cement Ltd. tried an increase of Rs 10 a bag in the middle of March but quickly rolled it back because of lack of momentum in demand.Shortage of labour as people haven’t returned from Holi holiday and the virus outbreak disrupted business conditions in the north, a dealer told BloombergQuint over the phone.While prices in the north stayed at Rs 358 per 50 kg bag, they held steady at Rs 370 in the central market..West: Bucks The TrendThe west was the only region that saw an increase in cement prices. According to a dealer, construction activity in the first half of the month and some shortage of fly ash led to to the increase, but that was reversed by the middle of the month.While the prices were increased by Rs 15 per bag, Rs 7 was rolled back due to the virus outbreak. Still, net prices have risen for the third successive month to Rs 340 a bag, according to dealers in the region..OutlookThe outlook for the industry has turned grave as the full impact of the Covid-19 pandemic is yet to be captured, Sanjay Ladiwala, a cement sector watcher, told BloombergQuint.Expect volumes to go down and the payments to be deferred due to liquidity crunch in the market if the prevailing situation continues, he said. This will impact the mobility of workers and lead to closure of construction sites, most of which will have a bearing on the prices, Ladiwala said.

BQ Survey: Coronavirus Stalls Cement Rebound, Worst May Be Yet To Come

The outlook for India’s cement industry is seen to have turned grave as the full impact of Covid-19 pandemic is yet to be captured

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