Cement Prices Fall For Fifth Straight Month
All-India cement prices fell for the fifth straight month in December because of excess supply from the south and year-end volume push by pan-India players like ACC Ltd. and Ambuja Cement Ltd.
Demand remained muted in northern, central India and western India. On an average, cement was cheaper by Re 1 per bag across regions, continuing the downtrend that started in August.
Morgan Stanley, which has downgraded the sector, isn’t optimistic. It said in a recent note that upside for cement prices is capped in the second half of FY19 mainly due to demand risk in the real estate segment because of potential funding challenges.
Pan-India cement makers like ACC and Ambuja Cement haven’t increased prices to boost their year-end volumes, said Sanjay Ladiwala, executive committee member of Cement Stockists & Dealers Association of Bombay. A dismal demand in the south led companies to push their products to other regions, adding to a pricing pressure in those areas, he said.
Lack of demand in southern India, according to an Ultratech Cement dealer in Madurai, is due to a host of issues like an unstable government in Tamil Nadu, slower approvals for real estate projects and lack of timely payments to contractors by the government.