Cement prices rise as demand looks up

Our Bureau | Updated on March 05, 2019

After a long lull, cement prices soared by ₹25 per 50 kg bag last month across India on rising demand.

The southern region saw the steepest hike of ₹52 a bag in Bengaluru, ₹62 in Chennai and ₹77 in Hyderabad.

Price hikes in other regions were less comparatively at ₹26 a bag in the West and ₹12 in the East. The central and northern regions were up by ₹7 a bag and ₹4, respectively.

However, prices rise in the North was moderate due to moderate growth in demand. Moreover, new owners of stressed assets are ramping up production at stressed assets.

Prasad Koparkar, Senior Director, Crisil Research, said the price hike, coupled with falling costs and rising demand growth will lead to 200-250 basis points improvement in margins in the current quarter.

However, he said sustainability of these prices beyond the current quarter appears uncertain as demand momentum is seen coming off in the first half of next fiscal given the impending elections.

Crisil Research expects 22-24 million tonnes of gross capacity additions in FY20, with almost 65-70 per cent being commissioned in highly competitive south and eastern markets.

The cost of power and fuel and freight have been trending down. Petcoke prices have softened to $91 a tonne in March quarter against $110 in the same quarter last year.

Freight expenditure is also expected to dip with falling prices of diesel and relaxation of axle-load norms. The new axle load norms would potentially aid 5-10 per cent savings on road freight.

Published on March 05, 2019

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