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Industry News
Cement - Weak demand and monsoon may lead to price fall - Centrum
Posted On : 2013-06-19 10:08:09( TIMEZONE : IST )
We interacted with cement dealers across India (25 cities) to get a sense of the demand and pricing scenario for the sector. Average cement price (on pan-India basis) has corrected marginally by 0.4% in the past two weeks driven by weak demand and early arrival of monsoon. There was marginal price increase in South and West regions in the last two weeks, while average cement price is down in East, North and Central regions. Dealers in a few cities believed manufacturers were planning to hike prices, but were skeptical on the absorption of higher price due to the monsoon season ahead. Cement price is expected to go up by Rs3/bag in Mumbai (West region) from today. Dealers continue to believe that demand is sluggish due to low construction activities and subdued demand from the housing and infrastructure segments. Going forward, dealers believe there could be a correction in cement price primarily due to weak demand and the arrival of the monsoon season. Though in the near-term we expect cement stocks to remain under pressure due to sluggish demand and subdued cement price in the monsoon season, in the long run we remain positive on the cement industry. We expect despatches to improve in 2HFY14E (post monsoon) as construction activities pick up which will also help manufacturers raise prices.
- Marginal correction in cement price in last two weeks: Average cement price (on a pan-India basis) corrected by 0.4% to Rs301/bag in the last two weeks led by a decline in the East, North and Central regions. There was marginal price increase in South and West regions (led by price hike of Rs3/bag in Mumbai from today).
- Demand environment still remains weak; early monsoon can play spoilsport: Cement dealers continued to point at weakening demand scenario and based on our discussion with them, we believe cement off-take has been sluggish in June '13. Dealers are expecting prices to decline going forward led by weak demand and early arrival of monsoon.