Demonetisation hits cement prices

While cement prices have been affected in the southern and western markets, volume growth has been adversely impacted in all regions in November following demonetisation, rating agency Icra said recently.

“In the southern market, the prices have shown a decline of Rs 30/bag in October and November together, with the current prices hovering around Rs 300/bag. On an average, in the southern market, the cement prices during 8M FY2017 stood at around Rs 305/bag, lower by Rs 20/bag when compared to 8M FY2016,” Icra said in a statement.

A similar decline in prices post demonetisation was witnessed in the western markets wherein the price, after having recovered by Rs 15/bag in October to Rs 265/bag, slipped to Rs240/bag in November 2016.

“On a Y-o-Y basis, the average cement price during 8M FY2017 around Rs 260/bag is down by Rs 10/bag, compared to 8M FY2016. The November prices for the East and the North remained stable at Rs 325/bag and Rs 335/bag, respectively,” it said.

While cement prices have been affected for the South and West, volume growth has been adversely impacted for all regions in November 2016, following demonetisation.

“Given that a significant portion of the cement demand is driven by real estate, it is likely to get impacted in the near term.

“The demand slowdown from the realty sector is expected to be offset to some extent by infrastructure demand, specifically backed by Central government funding,” Icra Ratings Senior Vice President Sabyasachi Majumdar said.

“Nonetheless, overall, the demand for the cement sector is expected to be adversely impacted by this development in the next two to three quarters,” Majumdar said. — PTI