Cement price went up by 8% in FY19

Cement price went up by 8% in FY19

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It should be noted that consequent to sharp rise in prices during last two months, cement prices in South are now ruling nearly Rs 30/bag higher than the third quarter average price. In the West, its nearly Rs 10/bag higher. However, prices remained almost steady during the 4thquarter in the remaining regions with minor fluctuations.  Interestingly, South markets, if the ruling prices are any indication, are the most lucrative ones though their capacity utilisation is one of the lowest one

All-India average price currently is hovering around Rs 315-330/bag, which is broadly flat on MoM basis and 8% higher on YoY basis. Having witnessed sharp jump in realisation in February 2019, the prices broadly remained flat on MoM basis in March 2019. Cement prices in the South and East regions increased by Rs 5/bag to Rs 362/bag and Rs 332/bag, respectively. In North and Central regions, prices declined by Rs 3-11/bag mom while West region saw a price decline of Rs 1/bag MOM basis.

Cement companies are facing delayed payments by the state governments for their supplies to government projects. These delayed payments have thrown their working capital calculations haywire and they don’t see situation improving drastically in the immediate future owing to general elections. Also, construction activities were affected post Holi in many regions of the country due to labour shortage.

It should be noted that consequent to sharp rise in prices during last two months, cement prices in South are now ruling nearly Rs 30/bag higher than the third quarter average price. In the West, its nearly Rs 10/bag higher. However, prices remained almost steady during the 4thquarter in the remaining regions with minor fluctuations.  Interestingly, South markets, if the ruling prices are any indication, are the most lucrative ones though their capacity utilisation is one of the lowest one.

Historically, April has been a month of price hike and this year too the trend is likely to be maintained. In fact, price increase guidance by companies at the start of fiscal year has become a common practice to meet year end targets. This year too the cement companies have indicated Rs.20-30 price per bag hikes in all regions effective from first week of April. However, sustainability of these price hikes during election period and monsoon season is a big question. We need to wait and watch whether cement manufacturers will focus on remunerative gains or go after volumetric gains.