However demand still remains illusive. Cement demand has been lackluster during the first eight months of the current fiscal. Floods and drought in certain states has adversely affected cement consumption for rural housing and other construction activity. The weak cement demand is probably the single largest motivating factor for the producers to curtail supply and raise prices. For otherwise excess supply would have meant lower realizations.
Builders lobby up in arms over alleged cartelisation .
Builders especially in Mumbai have taken cognizance of the alleged cartelisation resorted to by the cement producers and have threatened to bring the construction activity to a grinding halt. Mumbai on an average consumes around 0.3mn ton of cement per month. On the flip side any stoppage in construction could lead to an increase in the overall project cost because of time over run. The reduced supply has also meant that builders have been left with very little inventory at their disposal. Industry officials opine that the cartel this time around is strong enough to keep prices artificially higher for a longer period of time.