News Reading Practice #94

(100 Day Challenge)

CEMENT DEMAND REMAINS SLUGGISH IN JULY-SEPT QUARTER

DULL PROSPECTS. Despite minor price hikes, volumes expected to be flat on y-o-y basis

Abhishek Law
New Delhi

Cement demand continued to remain sluggish in the July-September quarter with price hikes announced in August and September failing to sustain "in-full”. Hikes were partly absorbed, and in some cases rolled back.

Extended monsoon, slower execution of government infra projects and a 2 per cent slowdown in infra construction, among others are seen as reasons for Q2FY25 exit prices being either flat or seeing a marginal increase (2-3 per cent) over the previous quarter (Q1), but volumes are expected to remain flat on a y-o-y basis.

Market participants told business line that demand has been "somewhat" sluggish in both institutional and non-institutional segments.

Prices were down at the beginning of Q2FY25, but with hikes announced in September and sustaining in select regions, "there was an overall improvement by the end of the quarter”.

A cement-maker said, the first two months of the quarter — July and & August ― witnessed a dip of nearly 2-3 per cent in prices. In September, there was a hike of ₹35-40 / bag. "Most of the price hike was rolled back, ₹10-15 bag could be absorbed," an official of the company said.

 

FLATTISH VOLUME 

Another cement-maker said, "Demand improved in September, but it is not enough to cover-up for the volume loss in the preceding two months. Overall demand is estimated to be flattish or even marginally decline YoY in Q2FY25."

According to consultancy firm Systematix, the industry saw price hike attempts of ₹35-40/bag in mid- August and early September. One hike was absorbed, but in most region there was a substantial rollback.

"Pan-India prices hover at around ₹349/bag and all the regions saw an uptick of ₹12- 15/bag. Demand stabilised in the month of September, still remain largely subdued, 8-10 per cent, lower vs Q1. Further, there is a possibility of price hike attempts in the months to come. Demand improvement, however, is key to sustaining price increases," it said in a report.

A hike of ₹80-100/bag was announced in the southern region while the absorption by the market was limited to ₹30-50/bag. Similarly, in the western region, a ₹40-45/bag hike was announced while the absorption was "not more than ₹20/bag". In the northern region, ₹50/bag hike was announced while the absorption was "close to ₹40/ bag", except in certain sub-markets. In the eastern region, the prices remained stagnant.

"Despite hopes of demand revival from the fag end of Q3, we expect the cement industry growth to taper off from 8-9 per cent to 4-5 per cent for FY25 due to sustained slowdown in demand," Systematix said.

EXCESS RAINFALL 

India's key infrastructure sector saw 1.8 per cent contraction in August largely led by excessive rains in various parts of the country.

InCred Equities said excess rainfall in the second half of the season impacted overall demand, across regions.

"Demand should improve by 15-20 per cent from cur- rent levels. Both institutional and non-institutional demand is expected to recover," it said, while a cement-maker said: “Demand triggers remains intact.”

The Varanasi-Kolkata highway to influence trade demand in the central and eastern regions which is stuck because of land acquisition issues - could see some pick-up; and push for housing projects in Telangana, etc being some factors that could lead to demand improve.

INFRA TRIGGER New infrastructure projects are expected to come in Rajasthan as the state govern- ment has been allotted funds. In Uttar Pradesh, over 80-90 new projects have been announced in the last three months. Sub-region wise price movements, In- Cred said, saw western UP and Uttaranchal adopt a ₹40-45/bag hike; while in Agra and nearby regions prices were down ₹40/bag (in comparison to Q1FY25). Central UP saw flattish price trends while in East UP price remain stable.

For cement makers, the south Indian region has been the best market in terms of consensus on pricing.

Photo Caption: KEY FACTORS. The extended monsoon, slower execution of government infra projects and a slowdown in construction have cast a shadow on the industry — NAGARA GOPAL

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REMAINS SLUGGISH (Stayed slow-moving, weak, or lacking momentum.) - (മന്ദഗതിà´¯ിà´²്‍, à´®ോà´¶ം à´ª്à´°à´•à´Ÿà´¨ം à´¤ുà´Ÿà´°ുà´•.)

DULL PROSPECT - A situation where there is a lack of interest, keenness, or zest. (മങ്à´™ിà´¯ à´ª്à´°à´¤ീà´•്à´·.)

Y-O-Y BASIS - Stands for year-on-year basis.

JULY–SEPTEMBER QUARTER – Refers to the second quarter of the financial year (Q2), spanning the months July, August, and September. (à´œൂà´²ൈ à´®ുതല്‍ à´¸െà´ª്à´¤ംബര്‍വരെà´¯ുà´³്à´³ à´¤്à´°ൈà´®ാà´¸ം)

PRICE HIKES – Increases in the cost or price of cement per unit (e.g., per bag). (à´µിà´² വര്‍ധനവ്)

ANNOUNCED – Publicly declared or made known. (à´ª്à´°à´–്à´¯ാà´ªിà´š്à´š)

IN-FULL - Completely, entirely, or without any reduction. (à´®ുà´´ുവനാà´¯ും)

FAILING TO SUSTAIN 'IN-FULL' - The price increases were not completely maintained or upheld over time. (à´ªൂà´°്‍à´£്ണമാà´¯ി à´¨ിà´² à´¨ിà´°്‍à´¤്à´¤ുà´¨്നതിà´²്‍ പരാജയപ്à´ªെà´Ÿ്à´Ÿു).

ROLL BACK - To reverse or reduce something to a previous state or level. (à´ªൂà´°്‍à´µ്വസ്à´¥ിà´¤ിà´¯ിà´²ാà´•്à´•ുà´•, à´•ുറച്à´šുà´•ൊà´£്à´Ÿുവരിà´•)

Q2FY25 – The second quarter of the financial year 2024–2025 (July–September).

MARKET PARTICIPANTS – Individuals or entities involved in the cement market, such as manufacturers, suppliers, analysts, or stakeholders.

INSTITUTIONAL SEGMENTS – Large-scale buyers like government entities, real estate developers, or infrastructure firms that purchase cement for projects.(വലിà´¯ à´¤ോà´¤ിà´²ുà´³്à´³ ഉപഭോà´•്à´¤ാà´•്à´•à´³്‍)

NON-INSTITUTIONAL SEGMENTS – Smaller or individual buyers, such as homeowners or small contractors, typically purchasing cement for personal or small-scale construction needs. (à´šെà´±ുà´•ിà´Ÿ-à´µ്യക്à´¤ിà´—à´¤ ഉപഭോà´•്à´¤ാà´•്à´•à´³്‍)

HIKES – An increase or rise, typically in prices, rates, or wages. (വര്‍ധനവ്)

DIP – A decrease or decline in something, in this case, a decrease in prices. (à´µിലയിà´Ÿിà´µ്)

FLATTISH VOLUME 

FLATTISH - Flat or stable, with only slight variations or changes. (à´¸്à´¥ിà´°à´®ാà´¯)

COVER-UP - To compensate for or conceal a loss or shortfall. (à´¨ിà´•à´¤്à´¤ുà´•, മറയ്à´•്à´•ുà´•)

PRECEDING - Previous or earlier in time. (à´®ുà´®്à´ªുà´³്à´³)

MARGINALLY - To a small or slight degree. (à´šെà´±ിà´¯ à´°ീà´¤ിà´¯ിà´²്‍, à´¨േà´°ിà´¯ à´°ീà´¤ിà´¯ിà´²്‍)

SUBSTANTIAL - Significant or large in amount or degree. (à´—à´£്യമാà´¯)

ROLLBACK- To reverse or undo a previous action, such as reducing prices or cancelling a price increase. (à´ªൂà´°്‍à´µ്വസ്à´¥ിà´¤ി, à´•ുറവ്)

HOVER- To stay around a certain level without much change. (à´®ാà´±്റമിà´²്à´²ാà´¤െ à´¤ുà´Ÿà´°ുà´•, à´šുà´±്à´±ിà´¤്à´¤ിà´°ിà´¯ുà´•)

STABILISED: Became steady or unchanging. (à´¨ിലനിà´°്‍à´¤്à´¤ി)

SUBDUED: Reduced or less intense. (à´•ുറഞ്à´žു)

SUSTAINING: Maintaining or continuing over time. (à´¤ുà´Ÿà´°ുà´•)

ABSORPTION: The extent to which the market accepts or absorbs a price change. (à´¸്à´µീà´•à´°ിà´•്à´•à´²്‍)

SUB-MARKET: A smaller, specific segment of a larger market. (à´šെà´±ിà´¯ à´µിപണി)

DESPITE HOPES: In spite of expectations or desires for improvement. (à´ª്à´°à´¤ീà´•്ഷകണക്à´•ിà´²െà´Ÿുà´•്à´•ാà´¤െ)

REVIVAL: Recovery or return to a better condition. (à´ªുനര്‍à´œ്à´œീവനം)

TAPER OFF: To gradually decrease or lessen. (à´šെà´±ുà´¤ാà´µുà´•, à´•്à´°à´®േà´£ à´•ുറയുà´•)

SLOWDOWN: A reduction in speed or activity. (à´•ുറവ്)

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