COVID-induced lockdowns lead to steep fall in cement demand

The lockdowns that have been announced due to the second wave of COVID-19 have adversely impacted cement demand in India. According to industry experts, as compared to March, cement demand fell by 20-30% in May. Due to the second wave of COVID-19, cement demand was affected significantly last month, Reliance Securities told the media. It stated that the construction activity has reduced because of the restrictions imposed by several states. The infrastructure projects are still moving as the April volume has gone down by 10-60% month-on-month (MoM) across the regions, it said. Cement is required primarily for construction and infrastructure projects, house construction, commercial real estate, sectors that have set back due to Covid-19. Cement demand will be back once the lockdown imposed is over, as the government has an enormous pipeline for infrastructure projects. Work on few infrastructure projects is still on and there is a demand coming from rural areas. Although, the cement demand by bigger cities has been majorly affected. According to industry experts, due to the lockdown, housing construction will slow down for the next 2-3 months. A Mumbai-based real estate player told the media that housing demand is only for ready-to-move flats. Buyers are not interested in investing money in under construction or upcoming projects, so new demand for cement is restricted in the short term. Also, the workers have moved to their native places due to lockdown, which has impacted the construction work. However, the government is also in support of low cement prices. Nitin Gadkari, Minister of Road and Transport has talked about a rise in the prices of cement and steel. Since the prices of steel and cement hiked in the last few months, it has impacted the stock prices of cement and steel companies positively. The Competition Commission of India (CCI) has also expressed concerns regarding price cartels in cement companies. Cement industries expect demand from large government projects. The government has progressive plans like the Bharatmala project and the Mumbai-Nagpur Express Highway. It also announced metro projects in many cities, and the demand for cement would come from housing for all projects. Image SourceAlso read: Will cement demand grow post-pandemic? Also read: Cement price escalation to impact real estate projects: NHAI