Cement companies are not being able to increase prices this December even though the season usually sees a revival of demand, leading to higher prices and capacity utilisation. But cement companies nationwide have not been able to raise prices this year as supplies continue to outstrip demand.

“Demand is flat compared with last year’s, although sequentially, it has improved. Cement companies are not able to increase prices due to low demand and excess capacity,” said Vinod Juneja, managing director of Binani Cement.

He blamed it on the slowdown in the real estate sector, which is battling high vacancy rates, falling demand for expensive homes and a lack of movement on executing large infrastructure projects.

Vineeta Singhania, managing director of J K Lakshmi Cement, said, “Demand is not picking up as many of infrastructure projects announced by the government are yet to be executed. The real estate sector is bearing the burnt of high interest rates and is unable to execute projects due to lack of funds.”

A senior official at Cement Manufacturers Association said the industry is reeling under 20-25 per cent excess capacity.

According to a report by Karvy Stock Broking cement sales have declined two per cent month-on-month to 17.8 million tonne (mt) in November. Capacity utilisation continued to be at a multi-year low of 72 per cent, it said.

Juneja said things are expected to improve going forward as the National Highways Authority of India is expected to start projects worth Rs 10,000 crore in the near future. Singhania said things should improve by the end of January.

Ravi Sodah, an analyst at Elara Capital, said it will take a couple of months before cement demand improves due to the NHAI project. While cement companies may not be celebrating, realtors who are their major consumers are not ebullient either.

Rajeev Talwar, executive director of DLF, said: “Cement prices have gone up about 30 per cent over the past one-and-a-half years and it will be good for the real estate sector if the prices get corrected. A correction in cement prices will help bring down inflation.”

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