Cement price recovery in western India

Cement prices in western India have recovered from the lows touched a year ago, and on a YoY basis have seen the highest improvement among all domestic regions.

In June the price of cement stood at INR335 (US$5.20)/50kg bag, 16 per cent more than the INR290/bag recorded in the same month a year earlier, according to a recent dealer channel check report by Kotak Institutional Equities. On a sequential basis, prices improved by INR2/bag.

The recovery has largely been driven by the state of Gujarat where prices have increased by INR20-30 MoM. Currently, in cities including Surat and Vadodara, cement prices stand at record-highs of INR320/bag and INR310/bag, respectively, the report added. In some parts of Gujarat, cement prices had fallen to a decade-low in the initial months of the calendar year hit by the effects of demonetisation, analysts said. The improvement is being attributed mainly to increased government spending on infrastructure spending and related activities.

Cement demand in Maharashtra was affected by a drought in the previous year. Although some improvement in demand has been witnessed there, cement prices remain more or less flat, added the report which was published on LiveMint, the website of the daily business newspaper Mint.

Meanwhile, cement prices in northern and central India corrected in June after remaining high at the start of the quarter. Price decreases were most prominent in the south. On a pan-India basis, cement prices corrected by INR6/bag MoM in June.