Demand continues to be sluggish
We interacted with cement dealers across India (25 cities) to get a sense of the demand and pricing scenario for the sector. Dealers across India believe that demand continues to be sluggish due to low construction activities and poor demand from the infrastructure segment. Also, as per dealers, demand from the trade segment has come down recently. In terms of cement pricing, there has been marginal increase in the last one month across India. In the South region, Hyderabad witnessed a steep hike of Rs90-100/bag in the last one month and current price stands at Rs300/bag. Pan-India average price increased 4.4% MoM to Rs303/bag. Barring Hyderabad, average increase in price was only 2.6% MoM. Going forward, cement dealers are expecting price cuts in coming days primarily due to weak demand and the monsoon season ahead. Though in the near-term we expect cement stocks to remain under pressure due to sluggish demand and subdued cement price in the Monsoon season, in the long run we remain positive on the cement industry. We expect despatches to improve in 2HFY14E (post monsoon) as construction activities pick up which will also help manufacturers to take price hikes.
Demand continues to remain weak: Cement dealers at most cities pointed out to a weak demand scenario and based on our discussion, we believe that cement demand was poor in May. Also, initially, there is slow off-take in June ’13. According to dealers, apart from low infrastructure spending by the government, weakness in demand was also due to scarcity of water. Also, dealers believe that the sale from the trade segment has come down in last few months.
Price rebounds in May after steep decline in April ‘13: After average price (pan- India) correction of 4.4% MoM during April ‘13, cement price increased by 4.4% MoM to Rs303/bag. However, barring Hyderabad, where the price hike was very steep, average MoM increase in cement price was 2.6% in the last one month.
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We interacted with cement dealers across India (25 cities) to get a sense of the demand and pricing scenario for the sector. Dealers across India believe that demand continues to be sluggish due to low construction activities and poor demand from the infrastructure segment. Also, as per dealers, demand from the trade segment has come down recently. In terms of cement pricing, there has been marginal increase in the last one month across India. In the South region, Hyderabad witnessed a steep hike of Rs90-100/bag in the last one month and current price stands at Rs300/bag. Pan-India average price increased 4.4% MoM to Rs303/bag. Barring Hyderabad, average increase in price was only 2.6% MoM. Going forward, cement dealers are expecting price cuts in coming days primarily due to weak demand and the monsoon season ahead. Though in the near-term we expect cement stocks to remain under pressure due to sluggish demand and subdued cement price in the Monsoon season, in the long run we remain positive on the cement industry. We expect despatches to improve in 2HFY14E (post monsoon) as construction activities pick up which will also help manufacturers to take price hikes.
Demand continues to remain weak: Cement dealers at most cities pointed out to a weak demand scenario and based on our discussion, we believe that cement demand was poor in May. Also, initially, there is slow off-take in June ’13. According to dealers, apart from low infrastructure spending by the government, weakness in demand was also due to scarcity of water. Also, dealers believe that the sale from the trade segment has come down in last few months.
Price rebounds in May after steep decline in April ‘13: After average price (pan- India) correction of 4.4% MoM during April ‘13, cement price increased by 4.4% MoM to Rs303/bag. However, barring Hyderabad, where the price hike was very steep, average MoM increase in cement price was 2.6% in the last one month.
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