Cement prices snapped their five-month gaining streak in seasonally weak June due to a slowdown in demand.
All-India average cement prices fell by Rs 10 month-on-month to Rs 362 per 50 kg bag after demand decelerated across all five regions due to labour shortage in monsoon season and a slowdown in government projects after the 2019 Lok Sabha elections, according to a BloombergQuint survey of 13 dealers across five regions.
While all the regions saw cement getting cheaper, the price difference was the widest in east. The quantum of the price cut was similar for the western and southern region.
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Prices Correct In East After Three Straight Hikes
Cement makers in East India reduced prices in a phased manner due to weak demand on account of labour shortage and supply pressure from south, according to three dealers. Cement prices in the region fell by Rs 15 to Rs 345 per 50 kg bag in June.
Price Falls In Western And Central Region
Cement companies in the western region cut prices by Rs 10 per 50 kg bag on account of poor demand from the real estate sector, which is facing liquidity concerns due to lack of funding from non-bank lenders. Average price dropped to Rs 345 per bag in west India.
Cement makers undertook a price cut in the central region, three dealers told BloombergQuint.
According to Anand Rathi's cement pricing report, the pricing power of the region may be limited due to lack of capacity additions.
Weakness Continues In South
Cement prices in the southern region, parts of which are facing severe water crisis, witnessed a price cut for the third straight month in June due to lack of demand. Average cement prices in the region fell by Rs 10 to Rs 360 per 50-kg bag.
Yet, the quantum of price cuts in recent months have been lower than the hike witnessed at the start of the year and prices continue to remain high in the region, three dealers told BloombergQuint.
North Witnesses Lowest Price Cut
Cement demand in the northern region has shown relative resilience compared to other regions despite the bigger hikes undertaken during April and May. For the month of June, average price of cement in the region fell by Rs 5 to Rs 360 for a 50-kg bag.
Dealers, however, expect another price rollback across all the regions if the Goods and Service Tax on cement prices comes down to 18 percent from 28 percent.
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