Here’s Why Cement Prices Fell To Nearly A Year Low In South, West India
Cement prices fell by Rs 20 per bag in West and South India as ACC and Ambuja pushed stock to achieve sales targets, dealers say.
Cement prices in south and west India fell to the lowest in at least a year as the nation’s two biggest producers pushed stocks to dealerships to meet year-end volume targets amid a supply glut, according to five dealers surveyed by BloombergQuint.
Prices in these regions fell by Rs 20 a bag over the preceding month so far in December, the dealers said on the condition of anonymity, adding that ACC Ltd. and Ambuja Cements Ltd.—that follow the calendar year as fiscal—have been pushing the stocks to dealerships to achieve sales targets.
ACC and Ambuja Cements are yet to respond to BloombergQuint’s emailed queries.
Cement makers are already grappling with excess supply as demand remained muted due to unseasonal rains, flood in few states, a post-election lull in government projects and unavailability of sand. These, coupled with the year-end pressure to meet sales target, dragged down the prices.
Deepak Khetrapal, managing director and chief executive officer of Orient Cement Ltd., a dominant player in south India, said pricing pressure continues in December due to very poor demand in Andhra Pradesh and Telangana. MNCs’ push to achieve volume targets further weighed on prices, he said.
The western region witnessed stability in pricing for the last two months. But lack of construction activities due to state elections in Maharashtra weighed on the pricing power, a dealer said.
Cement prices remained steady in north and central India. Citi Research in a note said it expects average realisation in the quarter ending December to remain flat sequentially in the northern and central regions and fall in south, east and west India.