Cement prices have continued the uptrend in the southern region, with the latest hike at around Rs5 per 50 kg bag. With this, prices in the region have reached Rs300-305 a bag, a new record in the last few years.
Prices elsewhere in the country, meanwhile, are in a downtrend.
“Cement prices have corrected by Rs15-30/bag in the north, central, west and east in last 15 days,” said an Enam research note dated May 12.
Some analysts attribute the firm trend in the south to production discipline, seen over the past seven months or so.
“We expect the production discipline to continue for some time as there are no benefits from a breakdown. One could disrupt this arrangement only if demand picks up, which is sluggish at the moment,” said an analyst from a domestic brokerage, requesting to be left unnamed.
Players have reportedly maintained utilisation at lower rates of around 50-70%, with older units operating in the higher range.
Some see the rains causing a seasonal drop in prices, going forward.
A south-based dealer, however, hinted at cartelisation. Prices have risen by around `30 per bag in the past 45 days, he pointed out.
Curiously, demand in the region is nowhere near as firm.
“The demand has been very sluggish as there is unavailability of both sand and labour in the construction industry,” said another dealer.
He drew attention to the timing of the latest price hike — coming in the one-month interval between the polls and the results of recent elections. “Once the new government takes charge they will ask them to reduce prices. Currently, it is purely cartelisation,” he said.
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