Uncertainty likely to keep cement rates flat: Experts
The uncertainty around the novel coronavirus’ impact on the construction sector is likely to keep cement prices flat in the upcoming months.
According to industry officials and sector analysts, although the effects of coronavirus aren’t felt in the construction sector yet, a prolonged crisis across business segments might affect the cement industry as well, and it is unlikely that prices will be increased under such volatility.
“Coronavirus’ impact is not felt in construction activity so far. It is unlikely to be affected in the nearterm, unless there is a major economic slowdown all across,” Sandip Ghose, chief operating officer, Birla Corporation told Business Standard.
The World Health Organization has already declared coronavirus a pandemic, and India has opted to selfquarantine for a month. Stock markets have been reacting to the uncertainty around the economic impact of this virus. “The market is falling as people are unsure about what the future holds in wake of the coronavirus,” said Kunal Shah, analyst with YES Securities.
The Sensex has fallen 6.41 per cent (35,697.4 points), from March 1 till March 11. Analysts have sounded caution, especially on companies having exposure to retail, multiplexes, amusement parks, and other public places. Electronic device manufacturers have also expressed their anguish over availability of components from China in wake of the temporary halt in trade.
On the other hand, the construction sector is also likely to feel the jitters in case of a protracted domestic crisis because of the virus, as it imports a significant amount of products from China. These include iron & steel, technical construction equipment, electronic equipment, and others such as plastic and fibre elements. Industry officials are cautious of the combination of a stagnant economy and the coronavirus threat.
“The demand has been recovering but this year, the growth will be much lower than what we had registered in previous years. On top of it, there is some uncertainty around coronavirus, but let’s see how it eventually reflects on the state of the economy,” an industry executive said.
Additionally, any outbreak of a momentous scale could also lead to labour shortage as well, which may impact construction activities.
Sector analysts are of the view that given the muted state of cement demand in the country, a price hike is unlikely in the near-term. “There may not be an increase, but prices are expected to remain stable in the nearterm,” said Ghose. According to a report from brokerage firm Anand Rathi, no price hikes were announced across India this month, except the South and West.