Cement prices firm up in South

M Somasekhar G Naga Sridhar Hyderabad | Updated on January 09, 2018


No change in production capacity and demand

Prices of cement have jumped by an average ₹25-30 per bag in the past week in the Southern States.

The price is now hovering around ₹310-320 per bag in Andhra Pradesh and Telangana.

In Karnataka, its around ₹340, while in Tamil Nadu and Kerala, it is being sold at over ₹360.

Before the recent hike seen in the past week, the prices were in the range of ₹280 in Andhra Pradesh and Telangana.

The present increase has not been normal, says M Prasad, a wholesale dealer of leading cement brands here. “Normally prices go up as the construction activity picks up during February to July for the year, which is seen as the best season for price realisation,’’ he told BusinessLine here.

Interestingly, the summer of 2017 proved different to the earlier three-four summers as prices unusually fell to around ₹270 in AP and Telangana. Typically, the prices are at peak with demand picking up and construction activity in full swing.

There has been no change in other factors such as production capacity and demand. Still the capacity utilisation and demand are under 40 per cent.

The second quarter had seen a price erosion.

As per industry data, prices from August, September to October show that price erosion was in the range of ₹5 in AP and Telangana markets.

Volume growth

In Bengaluru, the prices remained more or less stable. Chennai also saw a drop of another ₹5-10.

In the days to come, the expected volume growth in the industry could be varied.

In a recent earnings call, Executive Director of Sagar Cements, Sreekanth Reddy, said: “In AP and Telangana, we expect it to be in the range of 12 per cent to 15 per cent for the current year, Tamil Nadu minus 5, Karnataka plus 5. When we talk of Tamil Nadu, it is Tamil Nadu and Kerala put together. Maharashtra is plus 10.''

In AP, the non-grounding of works related to the new capital Amaravati did not give the anticipated boost to the industry.

The industry is hoping to gain from new capital probably a year and year-and-a-half from now in a slow fashion to be ramped up later

Even in Telangana, the real estate sector in the capital Hyderabad, is seeing ups and downs as far as new projects are concerned.

However, the occupancy rates in commercial space have seen a healthy growth.

The Telangana Government’s flagship 2BHK Programme for the people below poverty line is also showing a steady progress and not leading to increased offtake of the construction material.

Published on December 14, 2017

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