Cement prices fell by ₹10-₹20 per bag in November from the previous month. Analysts have attributed the fall in prices to the ban on sand mining and poor monsoon.
According to the research firm, Kotak Institutional Equities, Kerala and Tamil Nadu showed the highest decline in cement prices of ₹20 per bag on a month-on-month basis, while prices in Andhra Pradesh and Telangana were down by ₹13 per bag on a month-on-month basis.
As a result, cement prices in the South declined sharply for the second consecutive month, after falling by ₹16 per bag in October on a month-on-month basis, and currently priced at ₹332 per bag, it noted.
“Demand in Tamil Nadu remained muted, with October witnessing a decline of 26% when compared to last year. This was mainly on account of the sand mining ban and the drought situation in the region. Channel partners expect a marginal demand revival, but uncertainty remains, given the sand mining ban,” according to Motilal Oswal.
The firm also noted that in the South, prices declined by ₹10 per bag in Tamil Nadu and marginally by ₹5 per bag in Bengaluru (from October to mid-November).
“South prices declined by 3% to ₹287/bag in mid-November, from ₹296/bag in October. Our channel checks suggest that cement prices are likely to be increased by ₹15-₹20/bag in AP/Telangana and by ₹5-₹10/bag in Karnataka. However, prices in Tamil Nadu may remain unchanged, with monsoon keeping demand muted,” it added.
In the south, the cement demand is 66 million tonnes as against a production capacity of 150 million tonnes.
In a recent interview to The Hindu, N. Srinivasan, vice-chairman and MD of The India Cements had pointed out that non-availability of sand has stifled cement demand in Tamil Nadu.