Is Pricing Power Back For Cement Industry?
Cement prices snapped a six-month decline in October and are expected to rise further, according to dealers’ survey.
Demand for cement continued to increase in central India, while the western and eastern regions witnessed a pick-up, according to BloombergQuint’s interaction with dealers and separate surveys by at least two brokerages. The demand, however, remained subdued in the northern and southern parts of the country.
A price hike in November isn’t ruled out but the trend is expected to remain volatile, cement expert Sanjay Ladiwala told BloombergQuint. A firm rise in cement prices, he said, is only expected to start from mid-January and last till June as new projects kick in ahead of elections.
Bank of America, citing its dealer check, said cement prices are expected to increase by Rs 10-30 a bag in the eastern and western regions in November as demand picks up with the onset of the festive season after a seasonally weak 15-day ‘Shraddh’ period.
Naresh Kumar, an UltraTech Cement dealer from the eastern region, told BloombergQuint that the prices are likely to go up by Rs 10-20 a bag only after Diwali, as sales related to infrastructure activity picks up. Ram Yadav, a Mumbai-based dealer (western region) for Coal & Lime Shop, expects prices to increase by Rs 5-7 a bag during Diwali.
Also, the Cement Manufacturers Association indicated that prices can rise by up to 10 percent in the next six months to compensate for the increased fuel and transportation costs.