Cement - Prices decline further across most regions - BRICS

Cement prices witnessed a further decline across regions in December 2012. The southern region, which has been witnessing relatively stable prices, also saw a correction in December 2012, most likely due to the monsoon. Hyderabad saw the highest decline, followed by the northern markets. Our interaction with cement dealers indicates that demand remained largely sluggish, except in Ahmedabad and Mumbai, where there were signs of an improvement. Most dealers are also hopeful of seeing better demand in Q4FY13 and expect cement players to raise prices during the quarter. However, the current price volatility only underscores our belief that the oversupply situation will prevent a secular uptrend in prices (all prices in this report are per 50 kg bag, unless specified otherwise).

- Prices in Hyderabad declined after witnessing a rise of Rs30 in the previous month. Prices declined by Rs35 to Rs265, as demand remained lacklustre.

- Prices in Bangalore continued to remain stable and were up marginally by Rs5 to Rs340. While demand remains poor, cement companies are planning price hikes.

- Cement prices in Chennai declined by Rs10, even as demand remained stable. Currently, dealers are providing a discount of Rs25 on the billing rate of Rs345.

- Prices in Ahmedabad declined by Rs10 to Rs270, due to excess supplies from Rajasthan. However, demand has improved and cement players plan to raise prices by Rs5 on December 28, 2012 and by Rs10 on January 1, 2013.

- Prices in Mumbai declined by Rs10 to Rs270, due to new entrants, like Chettinad Cement and Orient Cement.

- Prices in Punjab declined by Rs25 to Rs255, as demand in the region was extremely weak, partly due to shortage of sand.

- Cement prices in Kolkata declined by Rs10 to Rs340 (incorporating a discount of Rs5), as demand in the region was bleak. However, manufacturers are looking to raise prices.

- Prices in Delhi continued to decline sharply byRs15 to Rs280, led by very poor demand.

Source : Equity Bulls

Keywords