Cement prices sag, may fall further

Cement prices declined across the country in the last fortnight except in South despite efforts by manufacturers to arrest price fall ahead of the lean monsoon season.

Prices fell Rs 10-20 per 50-kg bag in the last 10 days of June after rising Rs 5-25 per bag between May-end and early June in northern, eastern and some pockets of western India, according to a pricing trend report by Motilal Oswal Securities.

The demand too remains sluggish in most regions and may worsen in the next one month due to monsoon. Prices are likely to fall further due to weakness in demand.

Jinesh Gandhi, vice-president - research (cements), Motilal Oswal, said in the report that after rising till mid-June, prices on a month-on-month basis in north and east were down by Rs 8-15 per bag.

“However, central India posted relatively lesser volatility, albeit exit prices (June-end price) were down by Rs 10-15 per bag. Markets in west – Mumbai and Nagpur – remained mostly stable though Pune and Ahmedabad saw strong swing during June. Raipur (east) and Bhopal (central) showed stable to marginal increase in prices,” he said.

Cement firms generally raise prices ahead of monsoon as June to September is a lean period for sales.

In Pune, after rising by Rs 10 in May, prices went up by another Rs 20-25 in June. However, in the second fortnight of June, they fell by Rs 20.

Prices fell Rs 40 per bag to Rs 225 in Ahmedabad, before rising to Rs 260-265 per bag due to production discipline, which, some dealers said, was about 30% by Tier I players.

According to the report, mid-June prices of Tier II/ outside brands (like Wonder cement) went down to as low as Rs 197 per bag in Ahmedabad.

In Delhi, Jodhpur and Chandigarh, prices were down Rs 5-10 per bag. After Rs 15-20 per bag increase in May, Delhi and Jodhpur saw another increase of Rs 10 per bag in June before reversing by Rs 20 per bag in the last couple of weeks.

Contrary to the declining trend, markets in south India (the first to hike prices) saw cement prices either remain stable or increase.

“Prices in AP were up by Rs 90-100 per bag over past 45 days, led by production discipline. AP dynamics impacted the adjacent markets positively with Bangalore and Chennai seeing Rs 15-20 increase,” said Gandhi.

Some dealers from central and eastern parts see good harvesting season boosting rural demand, he said,

“Overall, while visibility remains weak for the near term, medium-term demand outlook has optimism with several infrastructure/power projects underway,” he said.
Source: http://to.ly/mgMr