Cement - No Clear Trend - Dealer Feedback - BRICS

Cement prices did not exhibit a clear trend in October 2012, especially when there are expectations of price hikes post monsoon. Some regions witnessed an increase in prices since September 2012, while other regions saw weakness. This was despite attempts by cement players to pass on the hike in diesel rates to consumers. However, Delhi was the only region to buck the trend and record a significant increase in prices. Our interaction with cement dealers suggests that poor demand made it difficult for cement producers to implement a sharp hike in prices post the monsoon. We continue to believe that prices are likely to remain volatile due to the oversupply situation, which will prevent any secular uptrend (all prices in this report are per 50 kg bag, unless specified otherwise).

Prices in Hyderabad have increased by Rs15 to Rs270, with demand remaining extremely poor. However, producers are likely to raise prices further.

Prices in Bangalore remained stable at Rs340.

Cement prices in Chennai have fallen by Rs10 to Rs340 and demand still remains weak.

Prices in Ahmedabad have fallen by Rs18 to Rs298, after reaching Rs293 in the beginning of October 2012, due to supplies from Rajasthan.

Prices in Mumbai are down by Rs10 to Rs280, with demand being lacklustre.

Prices in Punjab have risen by Rs20 to Rs285, after reaching low levels during the monsoon. Demand in the region is weak due to shortage of sand.

Cement prices in Kolkata are up by Rs7 to Rs362 (incorporating discount of Rs15), after falling from a peak of Rs390 in July 2012. The demand scenario in the region is bleak.

Prices in Delhi jumped up sharply byRs55 to Rs325, aided mainly by strong supply discipline.

Source : Equity Bulls

Keywords