Construction activities face hurdles as cement prices shoot up exorbitantly
Cement

Construction activities face hurdles as cement prices shoot up exorbitantly

Although the government has relaxed the lockdown for construction activities, contractors are reportedly finding it difficult to commence construction on sites because of logistic issues in terms of supply of building materials like cement, steel, among others.

Moreover, there has been an exorbitant increase in cement prices, which has also subdued construction activities at various sites.

While the price of cement stood at an average of about Rs 290-300 a bag three months ago, the price for each bag has now been reported to cross Rs 450 in certain parts of the country, especially the South.

Cement prices in India rose 3 per cent Q-o-Q from January-March, after remaining subdued for the last few months. And, prices are expected to remain high due to the current operational challenges, shortage of supply and lower production levels.

This unprecedented hike in cement prices has posed to be a major concern for construction companies.

The Coronavirus pandemic has had an impact on the demand for cement in a big way. Cement companies have reportedly suffered huge losses and cement transportation has been affected in a major way due to the lockdown announcement.

Considering that March to June is the golden period of construction with activities in full swing during these months, cement manufacturers had earlier expected a growth in consumption to the tune of 6-7 per cent. Notably, the six months from January to June account for about 60 per cent of the total cement consumption in the country. With construction activity coming to a standstill over the past one and a half months, this growth has largely been impacted.

Moreover, the monsoon season soon to be followed will further hinder construction activities, thereby impacting the demand for cement. What’s more, logistics remains a big challenge, and so also transportation in terms of drivers available.

Amid all this, it is known that cement companies have asked dealers to increase cement prices to cover up for the loss faced during the lockdown.

Cement prices in the medium term in most markets is expected to be in the range of Rs 320-375 per bag (of 50 kg), as reported. As manufacturers may keep their production volumes low even after the lockdown is lifted, prices are expected to remain firm in the near term as demand for cement may remain weak over the coming few months. A few companies across the country have managed to keep prices resilient by operating at lower capacity. Companies such as JK Lakshmi Cement and JK Cement have started operations at Gujarat and Karnataka, as reports indicate, while UltraTech, Ambuja Cements and ACC are expected to resume operations in the next few days.

Commenting on the spike in cement prices, said Sandeep Garg, Managing Director & CEO, Welspun Enterprises, “It is a matter of the supply chain. There is a demand and supply gap. It is a matter of time. We will have to wait and see regarding the cement prices.” Garg was also a panelist for CW’s webinar on Roads to Recovery.  Meanwhile, cement volume sales may witness a decline of about 25-30 per cent this fiscal due to the lockdown. While cement units have been allowed to start functioning from April 20 onwards, a recovery in the near term may not be expected due to demand and other concerns such as logistics, labour shortage, among others.

“In our baseline scenario, cement demand in India would contract by an unprecedented 10-15 per cent this fiscal. Extended vulnerability will deepen the damage for the sector to 20-25 per cent,” said market research firm CRISIL in its April report ‘Cement Cracks’.

Although the government has relaxed the lockdown for construction activities, contractors are reportedly finding it difficult to commence construction on sites because of logistic issues in terms of supply of building materials like cement, steel, among others. Moreover, there has been an exorbitant increase in cement prices, which has also subdued construction activities at various sites. While the price of cement stood at an average of about Rs 290-300 a bag three months ago, the price for each bag has now been reported to cross Rs 450 in certain parts of the country, especially the South. Cement prices in India rose 3 per cent Q-o-Q from January-March, after remaining subdued for the last few months. And, prices are expected to remain high due to the current operational challenges, shortage of supply and lower production levels. This unprecedented hike in cement prices has posed to be a major concern for construction companies. The Coronavirus pandemic has had an impact on the demand for cement in a big way. Cement companies have reportedly suffered huge losses and cement transportation has been affected in a major way due to the lockdown announcement. Considering that March to June is the golden period of construction with activities in full swing during these months, cement manufacturers had earlier expected a growth in consumption to the tune of 6-7 per cent. Notably, the six months from January to June account for about 60 per cent of the total cement consumption in the country. With construction activity coming to a standstill over the past one and a half months, this growth has largely been impacted. Moreover, the monsoon season soon to be followed will further hinder construction activities, thereby impacting the demand for cement. What’s more, logistics remains a big challenge, and so also transportation in terms of drivers available. Amid all this, it is known that cement companies have asked dealers to increase cement prices to cover up for the loss faced during the lockdown. Cement prices in the medium term in most markets is expected to be in the range of Rs 320-375 per bag (of 50 kg), as reported. As manufacturers may keep their production volumes low even after the lockdown is lifted, prices are expected to remain firm in the near term as demand for cement may remain weak over the coming few months. A few companies across the country have managed to keep prices resilient by operating at lower capacity. Companies such as JK Lakshmi Cement and JK Cement have started operations at Gujarat and Karnataka, as reports indicate, while UltraTech, Ambuja Cements and ACC are expected to resume operations in the next few days. Commenting on the spike in cement prices, said Sandeep Garg, Managing Director & CEO, Welspun Enterprises, “It is a matter of the supply chain. There is a demand and supply gap. It is a matter of time. We will have to wait and see regarding the cement prices.” Garg was also a panelist for CW’s webinar on Roads to Recovery.  Meanwhile, cement volume sales may witness a decline of about 25-30 per cent this fiscal due to the lockdown. While cement units have been allowed to start functioning from April 20 onwards, a recovery in the near term may not be expected due to demand and other concerns such as logistics, labour shortage, among others. “In our baseline scenario, cement demand in India would contract by an unprecedented 10-15 per cent this fiscal. Extended vulnerability will deepen the damage for the sector to 20-25 per cent,” said market research firm CRISIL in its April report ‘Cement Cracks’.

Next Story
Infrastructure Transport

NF Railway Launches Girder on World’s Tallest Pier Bridge in Manipur

The Northeast Frontier Railway (NFR) has reached a significant engineering milestone by successfully completing the girder launch on the iconic Noney Bridge in Manipur.Regarded as an engineering marvel, the Noney Bridge is recognized as the world’s tallest railway pier bridge. It forms a crucial part of the 111 km long Jiribam-Imphal railway line project.Recently, the final span of the bridge was successfully erected, marking the completion of all eight spans of this monumental infrastructure venture.Kapinjal Kishore Sharma, Chief Public Relations Officer of NFR, stated that this accomplishm..

Next Story
Infrastructure Urban

Cube Highways Trust Reports Rs 34.53 Bn Total Income in FY25

Cube Highways Trust (Cube InvIT), managed by Cube Highways Fund Advisors, concluded its second financial year post-listing on a strong note by reporting a total consolidated income of Rs 34.53 billion for the financial year 2025, marking a 12.3 percent year-on-year (YoY) increase.According to the official media release, Cube InvIT posted a consolidated earnings before interest, tax, depreciation, and amortisation (EBITDA) of Rs 2,380 crore, reflecting a 21.7 percent YoY growth. During the year, traffic volumes increased by 6.2 percent, while the Asset Under Management (AUM) grew 25 percent to ..

Next Story
Infrastructure Transport

New Flyover to Ease Traffic on Hyderabad’s Busiest Road

To improve urban connectivity and reduce traffic congestion in the city, the Greater Hyderabad Municipal Corporation (GHMC) will undertake the construction of a two-lane unidirectional flyover at NFCL Junction in Banjara Hills, along with a two-lane unidirectional underpass and a three-lane unidirectional flyover at TV9 Junction, as part of the state government’s prestigious Hyderabad City Innovative and Transformative Infrastructure (H-CITI) programme.The NFCL Junction flyover will be a two-lane unidirectional structure extending from Banjara Hills Road No. 3 towards GVK Mall. It is planned..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?