May 12, 2000|
Cement - Down with a thud
The cement sector is unlikely to forget the opportunities and threats that were presented during FY00. The year started with a bang, with talk of a supply deficit in 2002. Towards the end of the year, however, a possibility of a drought hung in the air, threatening to seriously damage future prospects.
Cement demand and production as can be seen in the chart peaked in March 2000. However, with severe water shortages gripping parts of the country, dispatches in April actually declined by 1.5%. And now with rumours that there may not be a normal monsoon this year, prospects of the cement sector look even dimmer. Infact cement prices in drought hit states have been declining persistently over the last couple of weeks. Average cement prices are now ruling at the same level as at the start of the fiscal year.
What does the sector have in store? If the monsoon were to turn out to be subnormal, demand for cement would have to be marked down considerably as without water construction activity would come to a standstill. In case the monsoon were to be normal, post monsoon the growth would once again look up and the prospects of a drought would linger only as a dark memory.
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