September 27: The cost of every commodity has increased in the market due to the adverse situation created by the Covid-19 pandemic. There is no demand in the market. The domestic market of cement and iron industry has shrunk. According to the concerned industrialists, these industries have not only reduced their production but are also forced to lower their prices than the actual cost.
Due to the disruption in the production and supply chain due to the Covid-19 pandemic, the cost of goods and services has increased, but the market has shrunk. The increase in the price of goods and services in the international market has increased the price of goods in Nepal which is dependent on imports.
According to Satish Chachan, managing director of Narayani Cement Industry, the demand in the market has decreased as the general public has started spending only on essential goods. This is due to the lack of investable funds in banks and the tightening of investment due to rumors of a serious economic crisis, argues Chachan.
"People are spending only on essential things. As construction is not given priority, the demand for construction materials is decreasing," Chachan said.
The government's priority is the upcoming elections. As a result, the development budget has not been spent and this in turn has affected the demand for cement and iron.
Stakeholders say that the cement industry has reduced production to a quarter of its capacity.
“There is no demand in the market. The demand for cement decreases during the rainy season. On top of that, due to strict policy in investment and high interest rates, there is no demand for construction materials,” said an industrialist, adding, “The production of such industries has now dropped to 25/30 per cent of their total capacity.”
This has affected the price of the product. Since there is no demand, there is competition between the industries to sell their products at throw-away prices. So much so that some have started selling their products at less than the cost price. The average price of Ordinary Portland Cement (OPC) per bag (50 kg) is Rs 750. But now, it has been reduced by as much as Rs 150 per bag. Although the cost of cement differs from one company to another, the average price of such cement in the market is between Rs 600 to Rs 650 per sack.
The price of PPC cement has dropped between Rs 500 to Rs 570 per sack.
The rod industries are also facing similar problems. Ramesh Agrawal of Jagdamba Enterprises says that they are operating their business not to make profit but to reduce losses.
“Therefore, we are forced to sell iron rods at low price,” says Agrawal.