Cement, steel factories in crisis as demand falls

KATHMANDU: Construction activities used to gain momentum during winter months in the past years, increasing demand for steel and cement. Cement and steel factories would run to their full capacity.

But cement and steel producers have witnessed an unprecedented slowdown in business this winter. Cement and steel plant operators say the business has slowed down due to the economic crisis, lack of liquidity in the financial system, and the November 20 election which has virtually brought construction activities to a standstill.

Tara Prasad Pokharel, vice president of the Cement Manufacturers Association of Nepal (CMAN), said there is no demand for cement and steel as banks have tightened credit flow in the residential housing sector. He added that low demand has caused the prices of construction materials to come down in the peak season.

According to Pokharel, prices of cement and steel have come down by Rs 50 per bag (50 kg) and Rs 7-9 per kg, respectively, after the Dashain festival (mid-September).

Citing low demand in the market, cement manufacturers have cut down production. It has impacted industries that were trying to revive after being battered by the COVID-19 pandemic, say industrialists. They say industries have started facing financial crisis.

According to CMAN, about a dozen cement companies have completely shut operation.  “Capacity utilization of most of the cement factories in operation is at about 50% at present,” he said, adding: “Rising cost of production, high interest rates and rising stock in warehouses are pushing cement factories toward a big crisis.”