← External Forces: Industry Specific (all topics)
Seasonality - construction materials (monsoon)
What it is
Cement, steel and building material demand follows the construction calendar. April to June sees pre-monsoon stockpiling with firm prices; July to September is the lean window as sites slow; October to December is the peak buying season
The pattern repeats annually and is independent of the underlying demand trend
Impact on industries
- Compresses effective selling into roughly three quarters, so fixed costs are carried through a monsoon quarter with reduced volume
- Mills discount to move inventory during the lean window, so the seasonal low is a margin low as well as a volume low
- Predictable and therefore plannable - maintenance shutdowns, inventory build and working capital cycles are all timed around it
- Quarterly comparisons must be year-on-year rather than sequential, since the sequential pattern reflects the calendar rather than performance