Cement prices in western India have fallen by about seven percent to 130 rupees per 50kg bag, as a slight drop in export demand forced some local firms to sell more in the domestic market, dealers said on Thursday.
Cement prices had stayed firm in India in the past three months, despite monsoon rains, as companies such as Gujarat Ambuja Cements Ltd and UltraTech Cement Co. Ltd. sold more cement in the Gulf region due to a spike in export prices.
Cement shares, which rallied over the past three months as a result of the exports, fell as much as 3.1 percent on Thursday on news of the easing prices.
Gujarat Ambuja, India’s third-biggest cement maker and the biggest in the western market, dropped as much as 2.5 percent to 348.20 rupees and UltraTech shed 3.1 percent to 292 rupees.
Dealers said prices in Gujarat were hit because they had been largely supported while huge amounts were exported from the state. To meet local demand, cement dealers from neighbouring states such as Rajasthan then started selling more in Gujarat, creating a temporary glut.
Analysts said export prices had climbed to $45 per tonne earlier this month, up 50 percent from a year ago, as a surge in crude oil prices fuelled a construction boom in the Middle East.
But cement stockists said prices in Bombay, the nation’s biggest construction market, were yet to be affected.
"Some cement makers in Gujarat are not able to push enough material into the export markets, which has led to a temporary over-supply situation," one Bombay-based cement stockist said. "But producers are doing their best to restore prices."