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Cement prices headed for a correction in July
Published on 5 Jul. 2009 11:48 PM IST
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After registering a healthy year-to-date (ytd) growth of approximately 11% in May to an almost flat growth rate in June 2009, the cement industry is now headed for the most challenging business season. And with the monsoons finally setting in, cement prices are expected to see a correction across the country starting this month. A recent Edelweiss Research report says the southern and western regions are expected to see a decline in cement prices, while the rates are likely to increase in the eastern region. The cost-per-bag in north India, however, is seen remaining flat, though a correction may happen depending on the impact of monsoons. In general, any upward or downward revision in pricing is expected to be in the region of Rs 3-6 per bag, depending on the demand-supply scenario in these markets. Cement demand in the western region grew 6.9% (yoy) in May, and the sentiments were strong in June too, owing to good demand from government projects. However, demand growth in Maharashtra was only 4.4% compared with 12.7% in Gujarat. “This is mainly because prices have come off by approximately Rs 3 per bag in some parts of Maharashtra. As for price outlook, there is a possibility of further decline in prices by Rs 3 per bag in July in certain parts of Maharashtra,” the report says. Cement prices in southern India may also see a correction of Rs 5 per bag, primarily due to monsoons and drop in demand. In the north, prices rose by approximately Rs 2-5 per bag in June. “Prices are likely to remain flat in July. Corrections, if any, would be on account of the monsoons,” the report says. In the eastern region, prices declined by Rs 5-6 per bag in West Bengal in June, though prices remained flat elsewhere in the region. “Prices are expected to increase by Rs 3-5 per bag in the first week of July across the region,” the report adds. At present, cement prices in Kolkata and Bhubaneswar are ruling at Rs 250-265 per bag and Rs 250-265 per bag, respectively. “Prices are expected to increase by Rs 3-5 per bag in the first week of July across the region,” the report adds. Domestic cement industry reported a healthy growth in consumption growth at 11.0% (ytd) in May. Cement majors witnessed a healthy despatch growth of 11.5% (ytd) in the same month. Exports, however, declined 7.8% month-on-month, though they rose on the year-on-year basis on account of a low base in the previous year. Capacity utilisation increased marginally to 90.4% in May 2009 against 89.1% in May 2008.

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