Cement prices see an improvement in April; outlook remains drab



Source: INDIA INFOLINE NEWS SERVICE

Our channel check for mid-April Cement prices indicate some reversal in in prices across regions on mom basis. For the two weeks of April, cement prices have increased by 3% on mom basis for all India average, however, on yoy basis it is down by 8%.

West and South witnessed 7% and 5% mom increase in price respectively, whereas prices for all other regions improved marginally by 1% each. This improvement in price in past two weeks is seen post a sharp decline in the month of March. The increases in price is partially attributable to marginal improvement in pricing discipline and increase in input costs. However, the sustainability of the price improvement is a concern and may witness some volatility in regions like South and West, as some of the price hikes have been rolled back in the last few days.

Dealers indicate that the offtake is sluggish in all regions except east, primarily due to higher inventory in the supply chain post dumping in end-March by producers. It is the same reason, which led to sharp crackdown of prices in the month of March.

On yoy basis, the pricing scenario remains discouraging, as the all India average price is down by 8% for the first two weeks of April. South and North prices are down by 15% and 14% respectively. This is followed by 7% and 6% decline in Central and West regions; prices in east are stable.

Though it is expected that the cement prices would move up given the rising input costs (pet coke and freight), the window for meaningful uptick for pre-monsoon is short.

We continue to remain positive on the demand outlook and expect the capacity utilization levels of the industry to improve in FY19 and FY20. However, our concerns on meaningful realization improvement remains intact. We believe pricing discipline is the only way to improve prices, as the competition for volume and market share gain intensifies.

Source: INDIA INFOLINE NEWS SERVICE