Cement Channel Check - On downward trend again; monthly update :: Edelweiss

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Cement prices continue to be volatile, declining by INR5-25/bag across Northern, Central and Eastern regions after briefly touching peak levels last month. Poor demand and volume push by December year-end companies are to be blamed for the decline. The price difference between trade and non-trade segment is widening with a gap - as high as INR 35-40/bag - in select cities. We expect the pricing environment to remain under pressure for nearly a month with a further downslide of INR5-15/bag. Prices continue to remain firm in Gujarat and Southern region.       

November despatches up 20.3% YoY due to low base

Industry despatches for November 2011 at 17.74mt, surged 20.3% YoY due to a low base. On a MoM basis, despatches declined by 2.2%. The YTD FY12 industry despatch growth now stands at 4.6% YoY vs 2.6% until October 2011.

·         Region-wise summary

We surveyed 29 cities across India to get a region-wise demand and price trends in both trade and non-trade categories. Key highlights are as follows:   

     

North: Widening gap in trade, non-trade segments

Due to poor demand and resumption of non-trade sales, prices in North are under pressure, having declined by INR5-25/bag in the last one month alone. Cities like Amritsar, Jaipur and Ludhiana where prices in trade category have corrected by INR5-10/bag, the non-trade prices are lower by INR20-30/bag, thereby exerting downward pressures on trade prices. Further declines are expected in coming weeks.    

  

East: Downward pressure on price

Prices in the region have corrected by INR5-20/bag in the region due to low demand and year end volumes push by select companies. Dealers expect a further decline in the coming weeks. 

West: Mixed bag

Prices have been a mixed bag in Western region. While there is an uptick in Gujarat, prices are under pressure in select cities of Maharashtra like Nasik and Nagpur.  Mumbai and Pune markets are relatively stable with a surge seen in non-trade prices.    

Central India: Highest correction so far

Central region has seen the highest correction of INR10-35/bag in the past one month due to low demand and increased inflow of material. Prices are expected to dip further into December.