Cement prices are expected to remain constant next month and will start picking up from January onward, traditionally the busiest season for construction activity, a top industry analyst said.
"Dealers across the country expect cement prices to remain constant during the next couple of months and anticipate its prices to pick up from January, which is the busiest season for construction activity," brokerage firm Sharekhan Ltd’s Senior Vice President Sandeep Nanda said.
"Any such price hike will augur well for cement companies," Nanda said, adding that cement prices overall remained constant across the country.
Prices in Mumbai remained in the range of Rs 240-245 per bag whereas prices in Gujarat ruled at Rs 220 per bag.
"On speaking to our dealers, we have come to know that cement demand is weak at the moment as construction activity has slowed down. Workers have gone back to their home towns in Uttar Pradesh and Bihar to celebrate the festival season," Nanda said.
Consequently, prices have remained constant at Rs 225-230 per bag in other leading states. In Andhra Pradesh too, prices remained constant at Rs 220 per bag.
As per Cement Manufacturers Association (CMA), manufacturers have hiked prices in the North by two per cent with effect from October 1. The Association also expects a tightening of demand-supply situation in South. The cement industry despatches maintained their growth of nine per cent year-on-year (y-o-y) in October. Among the top majors, both ACC and Ambuja Cements resumed their pre-monsoon level despatch figures.
ACC recorded a despatch growth of 6.7 per cent y-o-y to 1.76 million metric tonne (MMT), whereas that of Ambuja Cements grew by 3.6 per cent y-o-y to 1.48 MMT. As Grasim and Ultratech did not witness any capacity additions in the last one year, their despatch growth remained flat.
Amongst our mid-cap coverage, Shree Cement’s despatches fuelled by its capacity additions grew by 25 per cent y-o-y to 0.55 MMT, whereas JK Cement despatches grew by a healthy 59 per cent y-o-y to 0.35 MMT.
Even though India Cements and Madras Cements registered a year-on-year growth, their growth remained flat on a month-on-month basis, as their volumes declined due to monsoons. Overall industry despatches grew by nine per cent y-o-y to 13.67 MMT.
During H1 FY08, the Western region was the fastest cement consuming region, reporting a healthy 18 per cent rise. This was followed by the South and North zones where consumption was higher by 12 per cent and 11 per cent, respectively, the Centre for Monitoring Indian Economy (CMIE) said. While South and North reported a small surplus, the Western zone emerged as a deficit region.
Cummulatively, till September 2007, growth in cement production lagged consumption growth. Aggregate production grew by 9.1 per cent during H1 FY08, CMIE said.