Cement Prices Fall For Sixth Straight Month

20 November 2017

Cement prices fell for the sixth straight month in November, usually a period of brisk construction activity, as demand is yet to revive after demonetisation and the rollout of the new housing law.

A bag of cement now Rs 6 cheaper on an average compared to October pan-India, according to a report by Kotak Securities. Prices fell Rs 8-16 a bag in south and west India, while they remained flat in the north and the west. East was an exception with an increase of Rs 7.

The trend raises the risk of making 2017-18 another year of earnings downgrades for cement makers, the report said.

Cement prices, a key indicator of the health of an economy, suggest the government’s infrastructure push hasn’t been able to offset the fall in demand. Home sales are yet to recover since Prime Minister Narendra Modi invalidated 86 percent in currency in circulation a year ago. The new housing law – Real Estate Regulation Act – followed in May. It arms homebuyers against false promises and bars developers from diverting funds from one project to another. Construction froze at several projects and new launches plunged after its rollout, hurting one of the largest job-creating sectors.

In November, prices declined the most in Gujarat and Goa at Rs 14 and Rs 10 a bag, respectively. They rose by Rs 5 in Madhya Pradesh, the report said.

In the southern market, prices declined for the second straight quarter—by Rs 20 a bag in Kerala and Tamil Nadu.

Shares of cement makers rose today after the Union Cabinet increased the carpet area of houses eligible for loan subsidy under the government’s affordable housing scheme.

Source: Bloomberg Quint