Quarter begins on a steady note for cement industry

Quarter begins on a steady note for cement industry

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On all India basis, compared to May cement prices in June moved up a notch higher on an average basis by 2-3%. However, prices were flat when compared to June 2017 prices. Increased demand was seen from infrastructure sector while demand from real estate sector remained muted in June.

Overall price remained steady in the Western region during June. In Gujarat, there was price increase of Rs 10/bag due to pre-Monsoon demand. During some days in June, Ahmedabad saw a scarcity of PPC due to non-availability of flyash for cement manufacturers like Utlra Tech and Ambuja Cement. In Maharashtra, cement price held its steady ground throughout the month. In Nagpur there was increased demand from infrastructure segment.

On the Eastern side, Patna region saw a spurt in the cement price due to scarcity of the commodity. Cement price touched Rs 350/375 per bag in this region. However, cement manufacturers feel this price is unsustainable and the prices are likely to cool down with the onset of Monsoon as the sand once again becomes scarce during this period. In Odisha price jumped up by Rs 20 per bag which ultimately dampened the demand in the region. In Odisha, Emami and JSW are actively pushing their product which has killed any chance of substantial hike in price. In Central India, Bhopal and Indore witnessed good demand in urban and rural segments, keeping the prices high at Rs320/bag mainly due to rural demand and real estate activity in urban areas.

Southern region showed a mixed trend in price movement. While Bengaluru displayed a weak trend due to poor demand, Kochi market saw multiple price hikes during the month. In Kochi price touched Rs 390 per bag as against Rs 340 per bag in the previous month. Prices were steady in Chennai and Hyderabad.

Lack of infrastructure activities, continued scarcity of sand and price hikes by the cement manufacturers ensured that demand for the commodity remained weak in Delhi, Punjab and Rajasthan. In fact, cement price was hiked thrice in Delhi in June despite there being sufficient supply of the commodity.

Overall, the first quarter of FY 2019 was a steady month with demand coming mostly from infrastructure sector. However, demand from real estate sector is still subdued which is a matter of concern. Price hike in June by the cement manufacturers provide some cushion to them against dullness in demand during Monsoon when prices usually soften.