India:Cement prices-Up but not away

Byszheng

Updated Thu, 10 Mar 2016 14:33:00 GMT

Cement prices in northern India have reversed after staying down for long. Dealers say producers hiked prices suddenly by Rs.10-15/bag of 50 kg in February and anotherRs.50-70/bag in early March. With average cement prices in February at Rs.267/bag, that’s a substantial increase in March.

This does not appear to be an isolated instance but is not yet a widespread trend. The price increase in the north does appear to have spread to the nearby central region. But the western Indian market is subdued and in the southern parts, prices have retraced a bit after ruling strong for over a year. As for the eastern market, where prices are normally firm, it faced challenges.

Binod Modi, an analyst at Reliance Securities, wrote in a report that cement prices in the north had slid to unviable levels since September, which was reflected in the weak December quarter performance. A bounce was waiting to happen. North-based companies are also following the price discipline displayed by their southern counterparts. Lower production has led to a tighter market. In addition, there has been a slow but sustained increase in demand due to government spending on infrastructure and low-cost housing.