Cement prices remain flattish in January

Cement prices remain flattish in January

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If you compare January 2018 price with the period in 2017, one can see an average increase of around 5% in the cement price on all India basis

An interaction with the cement dealers revealed that cement prices, at around Rs 311/bag, in January remained almost at the same level as was in the previous month. However, if you compare January 2018 price with the period in 2017, one can see an average increase of around 5% in the cement price on all India basis.  However, cement price in January 2017 was affected by demonetisation effect due to which price had come down.

On the whole, cement price and demand are exhibiting mixed trend with certain pockets exhibiting firmness in demand. While price in Gujarat in general showed firm trend in January (around Rs 315/316 per bag vis-a-vis Rs 310/bag in December), thanks mainly to pre-festive (Holi) demand, price in Maharashtra in general remained stable. However, demand in Maharashtra (in central and southern region) is expected to pick up due to demand from some irrigation projects. At the same time, it may not create any gap because of ready supply from neighbouring Karnataka.

Cement price in the central region almost remained stable as not much construction activity is taking place in the region. Non-availability of rakes affected the movement of clincker and thus affecting the cement price in Kolkatta region. Demand in Bihar continues to remain subdued.

Sand shortage in Tamil Nadu affected construction activities in the state which in turn affected the demand for cement. However, with sand supply in the state returning to normalcy, demand is expected to pick up in the coming months. On the other hand, demand from Telangana and Andhra remained firm during January mainly due to healthy rate of conversion of announced projects into final execution. Prices in Kerala remained flat due to abundant supply from Gujarat through the sea route.

Demand in general remained strong in North India. Sand shortage in Rajasthan due to ban on mining affected construction activities in the state. Punjab and Himachal Pradesh faced under supply pressure following the ramp-up of newly acquired assets of JP Associates by UltraTech Cement.  However, in rest of the states demand was firm mainly due to rush to complete the projects and utilise the allocated funds before the end of financial year.

Till now demand for cement is emanating mainly from the government with real estate sector failing to add any significant demand.  In rural areas, independent house builders are helping to keep demand curve healthy.