Indian cement prices mount June recovery

Indian cement prices mount June recovery
05 July 2013

All-India cement prices saw an uptrend led by price hikes across all regions in the country. The southern region saw an average price rise of INR30/bag (US$0.50), the highest among all regions, which took the all-India average June 2013 prices to INR308/bag (US$5.10) as compared to INR294/bag (US$4.86) in May 2013.

In the east and west region, prices advanced by INR15-20/bag, which took average prices in the east and west region to INR333/bag and INR306/bag, respectively, for June 2013. In the northern and central region, prices increased in the range of INR5-10/bag, taking the northern and central price average to INR296/bag and INR293/bag, respectively.

Demand fell drastically across regions mainly due to early arrival of monsoons and a general slowdown in the infrastructure sector. With this upward pricing trend, India's average cement prices stood at INR308/bag. On a YoY basis, prices are up by INR15/bag. According to dealers, cement prices are expected to remain firm in the coming days, which is important to cover the costs as volumes are not supporting and falling continuously due to the monsoon arrival in the country.

Mangalam and JK Lakshmi reported cement dispatches numbers for May 2013. Cement volumes for both these companies declined 14.6 per cent and 12.5 per cent YoY respectively. Given the weak macro-environment, slowdown in housing demand and low infrastructure spending by government, prices are forecast to experience some correction going ahead. Hence, analysts continue to remain cautious on the sector unless a clear trend of healthy recovery in volumes is seen.

Total Indian cement dispatch growth for FY13 remained tepid due to sluggish consumption from the housing and infrastructure segments on account of key issues like rising cost of capital, land acquisition and clearances and unavailability of key raw materials like coal for the manufacturing industry.

Also, government-led demand push-growth remained lower in FY13. Although it is expected H1FY14 to remain tepid in terms of demand and analysts continue to remain neutral with a positive bias on the industry, the demand supply scenario is expected to improve on the back of a pick-up in infrastructure spending by the government (with higher allocation towards expenditure versus last year) and revival in private sector spending on likely softening of the interest rate cycle.

Published under Cement News

Tagged Under: Prices India