India: cement prices re-start downward roll?

India: cement prices re-start downward roll?
Published: 06 December 2010

Oversupply in the south India and incremental supply in the west are among the reasons cement prices have seen a fresh drop in several parts of the country, led by the southern region.


Chennai, which had seen price cuts two weeks ago after the Tamil Nadu chief minister’s intervention, has seen fresh cuts of INR10-15 per 50 kg bag. The new prices are at `260-265 per bag for retail and INR220-225 per bag for wholesale buyers.


"The demand is not too high and the ministry is too sceptical of an increase in prices. Also, rains are acting as a dampener in the region," a Chennai-based dealer said.


In Mumbai, prices have dropped marginally by INR3-4 per bag, thus for the region where Octroi is charged grade A cement has dropped to INR256-258 for retail buyers and INR246-248 for Grade B players. For buyers in the non-Octroi region like Bhayander and Mira Road, prices in both the grades are `7 lesser.
Even in the eastern region, prices have taken a knock, with Kolkata seeing a reduction of `10 per bag in the last 4-6 days. The drop was led by Ambuja Cements and followed by all the major A grade players such as Lafarge, ACC, UltraTech. Currently, prices are down at INR264-265 for wholesale buyers and INR270 for retail.


Andhra Pradesh, on the other hand, has seen a choppy trend.


Prices have fallen by as much as `10 per bag in some parts of the state even as Hyderabad city has seen an uptick of INR5 per bag, with retail prices going up to INR248 per bag for grade A and INR240-243 for grade B. In the wholesale segment, grade A is commanding INR243 per bag and Grade B INR235-237 per bag.


"The companies are saying that the wholesalers should sell at the invoice receipt that the manufacturers are selling at and not less than that. But the truth is that the demand is not high and the inventory with the dealers and stockists is also not high," said a Hyderabad-based dealer.


Rupesh Sankhe, research analyst from Angel Broking, said, "AP is flat and in fact declining by INR5-10 per 50 kg bag with retail pricing at INR220 per bag and wholesale for INR210."