Will cement prices in south sustain?- The New Indian Express

6 min read

Express News Service

CHENNAI: Cement prices in southern markets have been flat in November after witnessing a steep rise in price in October. The price rise sustained but the growth remained flat in November, as per dealers and company data. Prices for the southern market have witnessed a moderate rise, Rs 2 per bag, according to Nomura dealer check in November. The price remains flat after the strong price hike of Rs 40- 50 a bag in October.

In an earnings call with analysts, India Cements Chairman N Srinivasan said the infrastructure spending has come south and this has resulted in an increase in demand. “So, the increased demand will continue, and along with it, the present firm price regime will continue.” Responding to a question regarding fall in demand in September, the company said the growth is good and normally there will be lower growth during this period. MF Farooqui, Chairman, Ramco Cements, said demand remains strong, but the prices have been under constant pressure during this September quarter. “Prices have improved in October 2023 and I hope it sustains,” he said. While the price hike in October is sustaining in November, there are plans to increase the prices depending upon the market situation, the company said.

Orient Cements, present across five southern states and parts of western region, said the price in the first half of current fiscal stayed flat despite a strong demand and 15% growth. That’s been a bit of a dampener, the company said. Pan India cement average prices have declined in November. Average prices fell nearly Rs 13 per bag in north,  Rs 12 per bag in the western region and Rs 7 and Rs 6 a bag in the central and eastern regions, respectively. Average price has so far moderated by Rs 7 per bag in November, as per Nomura Research.

Demand uptick

Some moderation was expected by dealers in the north and west regions after the steep price hikes of Rs 40- 50 per bag in October, impacted demand negatively, the report noted. As per dealers, a significant uptick in demand is expected from December post the state elections and festive season.

In south, some recovery is seen post-Dussehra led by new project launches but lower infrastructure spending by state governments due to assembly elections in December has negatively impacted demand. Some price reversal is expected by dealers as cement players start to push volume share in the second half of this fiscal. Ramco is the volume leader in the south, followed by UltraTech and Dalmia, as per Nomura. Ramco has the highest exposure to south with about 70% volumes in 2023 fiscal, especially to Tamil Nadu and Kerala.

Puneet Dalmia, MD and CEO of Dalmia Cement, said like the previous quarter, weakness in south prices persisted, adding demand for the quarter is driven primarily by the southern region and with a complementing rise in low carbon cement. Responding to a question, the company said though the price rise is sustaining and  the prices in the south, went up now as demand is improving.

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