Rise in India's cement prices falters

Cement price rises in India, which started in India, have started to reverse, according to LiveMint. In June average prices fell to INR361 (US$5.17)/50kg bag, down by INR7, according to Kotak Institutional Equities Ltd.

Price reductions were mainly led by southern and western Indian companies, which reduced prices by INR8-11/bag MoM.

The fall in prices can be attributed to a drop in demand in June. While in April volumes increased one per cent YoY to 28.7Mt, throughout the April-June quarter consumption remained sluggish as labour shortages and a slowdown in government projects ahead of elections impacted demand.

Going forward no change is expected as poor demand and seasonality is forecast to keep prices under pressure. However, profit margins are predicted to improve as input costs ease. Prices of imported petcoke remain between US$95-100/t, while domestic petcoke prices have fallen 13 per cent to INR7600/t QoQ in April-June 2019. In addition, following restocking at power plants and a 21 per cent drop in international thermal coal prices, domestic thermal coal availability improved. As diesel prices remain flat and higher-axle load norms yield benefits, freight costs are also expected to remain stable in the Apr-June quarter.