Average trade prices of cement have risen by ₹5 per bag month on month in December so far across the country to ₹342/bag, led by increases in the eastern and northern regions. Despite lacklustre demand, prices have increased, and dealers are uncertain whether the price hikes will sustain, a report said.
In the eastern part of the country, prices have risen ₹16/bag and in the north ₹13/bag, while in the central part of the country the increase has been at a more modest ₹2/bag, Nomura said in its channel check on the sector.
In Kolkata and Patna, price hikes were made on December 2 and “there are serious concerns about the markets absorbing these price hikes, as the last two attempts in this region to hike prices (October and November) have failed,” the report said. While volumes improved in the last week of November in Kolkata, in cities such as Raipur and Patna they saw a 10 per cent fall on year. Dealers expected the demand to pick up in January.
On an average, in the eastern part of the country, cement prices are now at ₹311/bag, with Kolkata seeing the most increase on month. The prices have fallen ₹4/bag on quarter.
Absorption concerns
In the northern region, trade prices have increased on month to ₹363/bag, and here too dealers were concerned with the absorption. In Punjab and Rajasthan, prices have been hiked ₹10/bag, while in Delhi-NCR, the hike was ₹20/bag, as companies told dealers that the price difference would not be paid, going forward.
The report said that dealers felt demand would remain weak in key markets such as Rajasthan and Delhi NCR due to shortage of labour and stricter rules on construction owing to bad air quality in winter.
In the southern markets, trade prices have remained flat due to low construction activities and slowdown in real estate in Hyderabad. Overall, the dealers here expect prices to continue to remain flat with no triggers for them to move upward.
In the western region too, muted demand kept prices flat, while in the central region trade prices saw an average fall of ₹2/bag month on month.
