Cement - Dealer Feedback - Prices decline across regions - BRICS

Cement prices witnessed an unexpected correction in most regions in November 2012, especially after moderate price hikes post monsoon. While Hyderabad alone saw an increase in prices since October 2012, there was a steep decline in Delhi and Ahmedabad. Normally, post monsoon, prices witness an uptick, though our interaction with cement dealers indicates that a demand slowdown across regions exerted pressure on prices. The price correction in November 2012 underscores our negative outlook on the sector, based on our belief 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 recovered after falling by Rs40 to Rs255 in September 2012. Consequently, prices increased by Rs30 to Rs300, even as demand remained lacklustre.

- Prices in Bangalore fell marginally by Rs5 to Rs335. While demand remained poor for most part of November 2012, there was some improvement in demand in the last week of the month.

- Cement prices in Chennai remained stable at Rs330, though demand remained weak due to shortage of sand.

- Prices in Ahmedabad declined by Rs18 to Rs280 as a result of a slowdown in demand due to the elections and supplies coming from Rajasthan.

- Prices in Mumbai remained stable at Rs280, while demand was unimpressive. Attempts to increase prices by Rs10 were unsuccessful.

- Prices in Punjab declined slightly by Rs5 to Rs280. Demand in the region was extremely weak, partly due to shortage of sand.

- Cement prices in Kolkata declined by Rs12 to Rs350 (incorporating a discount of Rs17), down significantly from a peak of Rs390 in July 2012. The demand scenario in the region was bleak.

- Prices in Delhi declined sharply byRs30 to Rs295, led by very poor demand, even as producers attempted to raise prices.

Source : Equity Bulls

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