All India cement prices witness sharp decline
All-India cement prices witnessed some decline in May-17 from the highs of April-17 due to demand slackness and the government’s intervention toward end-April against the steep price increases initiated in most regions. Both demand weakness and government pressure resulted in price correction in most markets, with all-India average price declining 1% m-o-m in May-2017.
After seeing a sustained rise since February-17, cement prices in north fell by 2% m-o-m in May-17 and further by 1-2% in June-17. Prices in south, which had increased strongly in the first week of April-17, fell by over 3% m-o-m in May-17, led by price declines in AP/Telangana. The central market also saw a price decline of 3% due to weak demand led by the sand mining ban in UP. However, given demand weakness, prices in the north and central markets have not corrected in tandem, as implementation of overloading restriction since last 2-3 months led to curtailed supply, restricting price decline.
Cement prices in east, after witnessing hikes in April 2017, were largely stable, barring some correction in select regions such as Chhattisgarh. Demand in east has been extremely strong, recovering strongly post demonetisation. Western market was the only exception, where prices increased m-o-m in May-17, led by hikes in Maharashtra and Gujarat. Demand in Maharashtra has been extremely robust due to higher demand from infrastructure projects and pick-up in rural demand.
May-17 saw price correction across majority of the markets from the highs of April due to demand weakness and the government’s intervention to curb sharp price increases. Price corrections have been the highest in the north, south and central markets due to demand weakness in the central and south markets led by non-availability of sand. Pricing in the eastern market has been largely stable. The west market has been the only exception, where prices increased as late as the first week of May-17.
Cement prices in north have been on an uptrend since end-February 2017. Notably, prices had increased 3% m-o-m in April 2017, led by utilisation improvement. However, prices dropped from Rs 306/bag in April 2017 to Rs 298/bag in May 2017. Prices in the central region dropped to Rs 298/bag in May 2017 from Rs 306/bag in April 2017. In the southern region, prices in Tamil Nadu remained stable, while those in Andhra Pradesh and Telangana saw some correction post strong hikes in beginning of April-17. Average prices in the south dropped from Rs 317/bag in April 2017 to Rs 309/bag in May 2017.
Demand for the eastern region has been very robust, with price increase of Rs 15/bag in the first week of April-17. While majority of price hikes were retained, there was some correction in Chhattisgarh due to excess supply. Prices in east stood at Rs 293/bag in May 2017 v/s Rs 296/bag in April 2017. Demand in west remains favourable due to higher demand from infrastructure segment in Maharashtra and increased rural demand. Prices in west rose to Rs 283/bag in May 2017 from Rs 274/bag in April 2017.