Cement prices, after remaining subdued for last few months, have once again started surging in most parts of the country. Sector analysts say the move is in line with their expectations as post mid-January dealers had signalled fresh hikes.
The northern region has taken a lead as the price hike is in the range of Rs 20-25 while in the west, prices are being quoted Rs 15-20 higher for a 50 kg bag of cement. Eastern market too saw a rise of Rs 10-15 recently. Only the southern region has stayed so far away from price hike but dealers in the region hint that by this weekend they would too follow suit.
With the recent price hikes, the all India average price which was hovering around Rs 270 for a cement bag has surged to around Rs 280-285. This is the first major hike after the monsoon.
However, cement stocks have not reacted to this positive news yet. Shares of cement majors - ACC, Ambuja, UltraTech and Shree Cement, were either trading flat or were in the red on the Bombay Stock Exchange.
"Weather conditions remain a crucial factor for the cement demand growth. We had been expecting hike in prices after 15th January. There is clear improvement in ground level work but with cold conditions still prevailing in the north, the demand will rise only in February," explains a research head of a Mumbai-based brokerage firm.
But he was quick to add that cumulative growth in cement consumption is getting better than last year during the same period. In absolute term, cement demand has been growing in single digits for last couple of years. However, with base rising sector experts believe that the current financial year as well as FY14 may not see more than 7-8% increment demand as base becomes high.
India is world's second largest cement market after China with an overall cement making capacity of 330 million tonnes per annum. The top cement companies control around half of country's cement market.