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IDBI Capital Report
Our channel check suggests, average cement prices at an all India level is down by 2% month on month in September 2020.
After factoring in September 2020 weakness, average cement price is up 1% at all India level versus March 2020 and is up 3% versus September 2019 cement prices.
We understand weakness in the cement price is seasonal due to softness of cement demand in monsoon. India has received 7% higher rainfall in this monsoon season versus past averages.
Cement production in India for the month of July 2020 (latest available data) has decreased by 14% YoY to 24 million tonne, which is more than June 2020 decline of 7% YoY.
This is due to increase in the intensity of rainfall in July/August 2020 and fading away of pent-up demand.
Year-to-date FY21 (April-July) cement volume is at down 32% YoY and we have modeled cement production to decline by 14% YoY in FY21E.
Infra segment (road, bridges etc) construction has commenced but pace of work is weak. Until now demand is driven by rural segment and individual home buyers.
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