Cement prices meets expectation?
Cement prices in November were up MoM in the western, southern and eastern regions, while witnessing a decline in the northern and central regions. Price hikes announced at the beginning of November were partially rolled back post Diwali, as demand growth is lower than expectation. Demand has been soft in the second half of November, but is expected to improve from mid-December.
- North – Prices are being cut in the trade segment:
In November, cement prices were flat MoM in the non-trade segment; however, they declined by Rs5-15 per 50-kg bag in the trade segment, across key markets. Prices were further cut by Rs5-10 in the Delhi and Rajasthan markets from 1-Dec-2020. The impact of the farmers protest on cement demand seems limited to the Punjab rural market, as per media reports. End-November price range was Rs305-370 per 50-kg bag in New Delhi, Rs260-355 in Jaipur, and Rs285-370 in Ludhiana.
- South – Prices maintained in November; demand weak:
Cement prices are largely unchanged in the region, as demand remained weak in November due to Diwali holidays and other local factors. In Telangana, housing demand was weak, given restriction on registration for non-agricultural properties (closed since September 2020). In Tamil Nadu, Cyclone Nivar had an impact on demand in the last week of November.
End-November price range was Rs270-340 per 50-kg bag in Hyderabad, Rs280-390 in Bengaluru, Rs325-395 in Ernakulam, and Rs310-400 in Chennai.
- East – Prices on a downward trend:
The cement price increase taken in the first half of November was partly reversed in the latter part of the month − prices were cut by Rs5-30 per 50-kg bag. Weak demand post Diwali, coupled with rising capacity led to a price decline. Prices were further cut by Rs10 in the West-Bengal and Odisha markets from 1-Dec-2020. Cement prices in the East are the lowest in India and are likely to remain under pressure due to constant capacity addition in the region. End-November price range was Rs260-290 per 50-kg bag in Kolkata, Rs285-320 in Patna and Rs230-290 in Bhubaneswar.
- West – Pricing discipline maintained:
Cement prices picked up in Maharashtra in November, on a MoM basis (largely in the non-trade segment), although remaining flat in Gujarat. The price hike ranged at Rs20-30 and was driven by improved demand in the infra segment and the overall pricing discipline maintained by the companies.
- Central – Higher discounts offered; mixed trend:
Cement prices have largely remained flat MoM; the Rs5 increase taken at the beginning of November was offset by higher discounts post Diwali. Demand growth has been weak in and around the Indore market, partially due to rising Covid cases and unavailability of labour. In other markets, such as Bhopal and Lucknow, the overall demand growth has been satisfactory.
End-November price range was Rs315-355 per 50-kg bag in Mumbai, Rs300-330 in Pune, and Rs300-341 in Ahmedabad.
End-November price range was Rs275-350 per 50 kg bag in Lucknow, Rs-265-340 in Bhopal, and Rs260-330 in Indore.
Companies had taken significant price hikes in April and May to offset the impact of the significant volume loss. Prices had declined in the monsoon, but have seen an uptick since September given better-than expected demand recovery. The media reports suggest that prices can see some softening in coming days, as companies with December year-ending may adopt aggressive price strategies to push more volumes. Further, demand has seen some moderation post Diwali, although they are expected to improve in the second half of December.
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