India: Monsoon effect lower this year

The seasonality in cement production is increasingly becoming a thing of past for the Indian cement producers. Gone are the days when the cement companies used to curtail production between April and July to avoid a market surplus that could force them to reduce prices.

In the past, leading cement companies cut down production by 15-16 per cent between April and July in 2005. However, this has come down to as low as 6-8 per cent in the current year.

Demand for cement has been buoyant, driven by large amount of infrastructure and housing growth in pockets like Noida, Gurgaon, Chennai, Hyderabad, etc. The sustained demand even during the months of rain is something that helped

most cement producers to go ahead with a price hike of Rs 3-5 per 50 kg bag in July.

“For the past two years, cement consumption demand has not seen any impact owing to monsoon and therefore prices have not come under pressure,” said AK Saraogi, chief financial officer, JK Cement.

Domestic cement production in the April-June period of the current year has seen a growth of 6.91 per cent over last year and consumption demand has been equally good despite the rains.

According to the Cement Manufacturers’ Association, cement production and despatch in the April-June period of the current financial year has been 41.88 million and 41.7 million tonnes, respectively, up 6.91 and 7.33 per cent over last year’s corresponding figure.