Cement Channel Check - Price hikes on the anvil; monthly update:: Edelweiss,

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With the advent of the busy season, cement prices are set to increase from the current level. Though, since the beginning of January 2012, price hike of INR5-10/bag has been announced in select parts of North and Central regions, the same is yet to be implemented. With demand expected to gain momentum post January 15, we expect the hikes to be absorbed and rise further. We expect prices to remain firm in the coming few months.

December despatches likely to be up 14-15% YoY

Taking a cue from December despatch numbers reported by major cement companies, we expect industry despatches for the month to be up 14-15% YoY. YTD, however, industry despatch growth would stand at 5-6% YoY.

·         Region-wise summary

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

      

North: Prices set to increase

Current cement prices are down INR 5-25/bag compared to prices on December 9, 2011, with maximum correction in the non-trade category in the Delhi market. Companies have announced price hike of INR 5-15/bag beginning January which is yet to be implemented. However, with demand expected to pick up post January 15, dealers expect price hike to get absorbed in the market and see an uptick further.    

East: Prices on the rise

Cement prices in the region are already on the rise, having gained by INR 5-10/bag in Orissa, West Bengal and Bihar markets. Though prices are currently under pressure in Chhattisgarh (Durg and Raipur), we expect a pick up post mid January. Dealers expect further price hikes across the region in coming weeks.

South: Flat prices

While prices in the region remain largely unchanged, there is palpable pressure in the Tamil Nadu market. Dealers expect downward pressure if demand does not pick up in January.

West: Mixed trend

While prices in Gujarat remained firm, the trend in Maharashtra is mixed. Cement prices in the Mumbai market corrected marginally while they remained flat in Pune. Prices have corrected by INR 10-15/bag in Nasik while they have seen an uptick in the Nagpur market. Demand in the region remains satisfactory.

Central India: Bracing for a hike

While current cement prices are down INR 5-15/bag compared to prices as on December 9, they are set to increase in the coming days. On expectation of revival in demand post January 15, prices are expected to increase by INR 5-10/bag.