Cement sales falter in May due to weak demand, India

Cement sales falter in May due to weak demand, India
Published: 08 June 2011

Slowdown in infra projects in five states due to polls added to sluggishness Cement sales continued its downtrend in May with most of the leading cement manufacturers including ACC, Ambuja Cement and UltraTech Cement, which have pan India presence, reporting a sharp decline as demand from the infrastructure and real estate sector faltered.

However, ACC registered a 14 per cent increase in sales largely due to lower base in the comparative period last year. Its production jumped 10 per cent.

ACC, which was lagging behind others in capacity addition, had commissioned a capacity of 12,500tpd at Wadi in Andhra Pradesh and 7500tpd at Chanda in Maharashtra during the last one year.

“There was not much improvement in sales even after cement companies partially rolled back the price hike implemented in April,” said an analyst.

The slowdown in implementation of infrastructure projects especially in five States, which went for Assembly elections, further contributed to the sluggish demand, he added.

The weakness in sales just before the onset of monsoon does not bode well for cement companies as they were expecting the demand to pick up with real estate and infrastructure companies rushing to complete their projects.

“Besides, elections in five States, an acute shortage of labour across regions impacted construction activities leading to lower cement demand. Price hikes announced in May were not absorbed by the market,” said Mr Ajit Motwani, Research Analyst, Emkay Global Financial Services.