Cement prices, which have continuously been firming up despite Competition Commission of India's hefty penalty and onset of monsoon, have now started easing a bit if not more.
Over the last fortnight, all India average cement prices have declined by around 2% from Rs 310 to Rs 304 for a 50 kg bag of cement. Thanks to the heavy rains and floods in the northeast and states like Bihar and Uttar Pradesh that prices of the building commodity eased.
According to cement dealers, in Bihar alone prices have dipped from Rs 350 to Rs 310 while in Uttar Pradesh the current prevailing prices are at Rs 280 against Rs 320 in July. Further, the northern markets too have seen a fall of Rs 10-15 for a bag.
It needs to be pointed out that in mid-July prices had surged to as high as Rs 315, said research head of a Mumbai-based brokerage who track cement and construction sectors. However, western and southern markets continue to see prices higher than Rs 300.
Sector experts had anticipated that following the CCI's verdict on cartelisation, cement prices will come under pressure. However, this did not come true. Rather, prices surged beyond Rs 300 after falling to as low as Rs 290 on all India level.
Industry's capacity utilisation continues to be below 75% which help cement companies control supply to the market and maintain higher prices. But industry officials say that price fluctuation is a function of demand and supply and they are meeting the consumption.
During the first quarter of the current financial year, industry's sales grew around 9-10% . Barring April, when sales dipped to 7% , May witnessed a robust growth of close to 13% . In June, as an impact of CCI's verdict, industry body Cement Manufacturers' Association did not disclose sales and production number but analysts estimated June to have fallen in line with the previous month's growth.
Going forward, market experts say cement prices will continue to remain under pressure as rains intensify during the later months of the monsoon season.
