BQ Survey: Cement Prices Fall For Seventh Straight Month

Cement prices fell for the seventh straight month in December amid oversupply concerns due to year-end sales targets at cement makers and delays in government projects.All-India average cement prices declined Rs 11 month-on-month to Rs 323 for a 50-kilogram bag in December, according to 13 dealers surveyed by BloombergQuint.Sharp price cuts were witnessed in south and western India, the dealers said, while prices sustained in north and remained a little lower in the central region. The survey also suggested the possibility of a price hike in the eastern region..Under PressureCement makers in the southern region have already been grappling with excess supply as demand remains muted due to a sluggish pace in tendering of government projects and unavailability of sand, according to three dealers. That, coupled with the year-end pressure to meet sales targets, dragged prices in the region for the third consecutive month. ACC Ltd. and Ambuja Cements Ltd. follow the calendar year as their financial year..Pricing pressure continued in December due to very poor demand in Andhra Pradesh and Telangana, Deepak Khetrapal, managing director and chief executive officer of Orient Cement Ltd., said. Multinational cement makers’ push to achieve volume targets further weighed on prices, he said, adding that prices will recover only when “rationality prevails”.Cement prices in the region fell by Rs 20 per bag to Rs 285 in December.Demand Pangs In WestCement prices in the western region fell by Rs 20 per bag to Rs 305 during the month on account of poor demand and an extended monsoon. Slow infrastructure activity due to the Maharashtra elections added to the demand slowdown.That comes after prices remained unchanged during the previous two months. Dealers that BloombergQuint surveyed don’t expect any price hike in the near term due to a lacklustre demand in the region.Sharp price cuts were seen in cities like Ahmedabad, Rajkot and Vadodara, the dealers said..Prices Drop In Central IndiaCement prices fell for the second straight month in central India even as the quantum of the price cut was minimal. Prices, dealers said, fell due to lack of construction activity in the region.Limited capacity additions by cement producers, however, cushioned the downfall.Cement prices fell by Rs 5 to Rs 355 per bag in December..Price Hike Expected In JanuaryIn the eastern region, dealers have been informed about a potential price hike of Rs 20 per bag starting January 2020, according to three dealers surveyed by BloombergQuint.Cement prices in the region fell by Rs 10 to Rs 302 per bag..Prices Unchanged In North IndiaPricing power of cement makers showed relative stability in the northern region. Prices in north India remained unchanged after a ban on construction activity was partially lifted from the NCR region, according to three dealers surveyed by BloombergQuint.The average cement price in the region remained at Rs 338 per bag..OutlookCiti Research in a note said it expects average realisation in the ongoing quarter to remain flat sequentially in the northern and central regions and fall in south, east and west India.Brokerages including Kotak Securities and Emkay Global expect the quarter ending December to be weak in terms of realisation. Kotak Securities, which has a cautious rating on the sector, expects large capacity additions to keep industry utilisations under 72 percent over the next two years..How To Sign Up For BloombergQuint Story Notifications

BQ Survey: Cement Prices Fall For Seventh Straight Month

All-India average cement prices dipped by Rs 11 month-on-month to Rs 323 for a 50-kilogram bag in December.

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