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BQ Survey | Cement Prices Rise After Five Months But...

Cement prices rose in January after falling for five months but the sector’s still far away from meaningful recovery. Here’s why.

A contractor pours out cement at a townhouse under construction. (Photographer: David Paul Morris/Bloomberg)
A contractor pours out cement at a townhouse under construction. (Photographer: David Paul Morris/Bloomberg)

Cement prices rose in January after declining for five months but the sector’s still far away from any meaningful recovery, according to a BloombergQuint dealer survey.

All-India prices increased by Rs 2 for a 50-kilogram bag to Rs 321, BloombergQuint’s interaction with 12 dealers across five regions and a separate survey by Kotak Institutional Securities showed. That was supported by price hikes in central and northern India.

While prices continued to fall in the south, the trend remained muted for east- and west-based cement makers, the survey showed. Price hikes were rolled back in the eastern and western markets due to lack of demand in the absence of any fresh order wins ahead of the general election.

Most of the demand for cement in the east comes from Odisha, which is scheduled to go for legislative assembly polls concurrent with the general election, said a dealer from Bhubaneshwar.

Ultratech Cement, in its conference call after third-quarter results, said it expects volumes to grow 7-8 percent for financial year 2019-20 as demand from the infrastructure sector may remain subdued during the election year. India’s largest cement maker had earlier offered a double-digit guidance for volume growth.

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A Bleak Month In South

Cement prices in the south were lowered by Rs 5 a bag in January—the sixth straight month of decline—due to a supply glut in Andhra Pradesh and Tamil Nadu. Prices are unlikely to recover due to fiscal-end volume push by top cement makers like Ultratech Cement, according to a dealer at Calicut.

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Uptick In North

The northern market managed to increase prices by Rs 5 a bag in January.

Most cement makers, even in absence of any significant demand, are trying to retain or push their prices to prevent further contraction of margin, said a cement dealer in Delhi.

Sharpest Hike In Central Region

Cement makers based in the central region raised prices by Rs 8 for a 50-kg bag. Most of the demand came from Bhopal and Agra.