Indian cement prices return to pre-demonetisation levels

Cement prices in India have returned to levels prior to the government’s demonetisation move, analysts at ICRA Ratings have reported.

“With the impact of demonetisation gradually subsiding, cement prices have reached the pre-demonetisation levels in April 2017 in most markets,” the Economic Times of India quoted Sabysachi Majumdar, senior vice-president and group head, ICRA Ratings as saying.

Prices declined in the range of 16-17 per cent in the western and southern regions between November last year and January, this year and started picking up around February, reaching INR265/bag and INR325-330/bag, respectively in April. In the eastern region the decline was rather moderate, of around seven per cent while the northern region remained fairly indifferent to demonetisation in terms of cement prices, the report added.

India's cement demand growth and prices were derailed by the government's surprise demonetisation move announced on 8 November 2016, when it declared INR500 and INR1000 bank notes illegal tender. These notes represented 86 per cent of cash at the time. The effects of the cash ban were felt immediately as the move coincided with India's peak construction season (November-February).