Cement Price Rise
Cement prices rise in North and Central India; Andhra Pradesh surprises positively
After a damp August season, cement prices increased steadily in September. The month of October saw the trend continuing in most regions of the country. Surprisingly this phenomenon was witnessed in Andhra Pradesh as well which has been a not-so-profitable region for the cement makers.
All India prices at Rs 299 per 50 kg bag, was up 1.7% on a month-on-month (mom) basis. The discipline in pricing among the cement makers has helped the prices to improve on the back of a higher supply relative to demand. This phenomenon has helped the companies post good results in the past few quarters. The northern region saw a hike of 2.6% mom in prices due to increasing demand from areas such as Delhi, Haryana and Chandigarh. The only area of concern is Punjab where sand mining issue has led to lower availability of sand. Central region saw a hike of 4.3% in prices mainly from the cities of Madhya Pradesh. Demand in Uttar Pradesh has been more or less constant. The price per bag stands at Rs 289 per bag. Prices in eastern and western regions have remained constant and declined respectively, primarily on account of the ongoing festive season. Dealers expect the prices to rise in the coming months due to increasing demand post the festive season.
Andhra Pradesh was a pleasant surprise for the industry as the region saw an increase of 4% in cement prices mom after new entrants like JSW and Jaypee slashed prices in September to capture market share. The demand in the state has been lacklustre in the past two years and that has led to lower valuations of companies (for instance India Cements) with presence in this region. Improving demand and adherence to pricing discipline will result in value creation from this region which is one of the major markets for cement.
After a damp August season, cement prices increased steadily in September. The month of October saw the trend continuing in most regions of the country. Surprisingly this phenomenon was witnessed in Andhra Pradesh as well which has been a not-so-profitable region for the cement makers.
All India prices at Rs 299 per 50 kg bag, was up 1.7% on a month-on-month (mom) basis. The discipline in pricing among the cement makers has helped the prices to improve on the back of a higher supply relative to demand. This phenomenon has helped the companies post good results in the past few quarters. The northern region saw a hike of 2.6% mom in prices due to increasing demand from areas such as Delhi, Haryana and Chandigarh. The only area of concern is Punjab where sand mining issue has led to lower availability of sand. Central region saw a hike of 4.3% in prices mainly from the cities of Madhya Pradesh. Demand in Uttar Pradesh has been more or less constant. The price per bag stands at Rs 289 per bag. Prices in eastern and western regions have remained constant and declined respectively, primarily on account of the ongoing festive season. Dealers expect the prices to rise in the coming months due to increasing demand post the festive season.
Andhra Pradesh was a pleasant surprise for the industry as the region saw an increase of 4% in cement prices mom after new entrants like JSW and Jaypee slashed prices in September to capture market share. The demand in the state has been lacklustre in the past two years and that has led to lower valuations of companies (for instance India Cements) with presence in this region. Improving demand and adherence to pricing discipline will result in value creation from this region which is one of the major markets for cement.