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Cement prices to remain tepid as GST, Rera and monsoon hit demand

Sector analysts opined that the northern, central and eastern markets were particularly hit

Avishek Rakshit  |  Kolkata 

Representational image
Representational image

The Goods and Services (GST) and Real Estate (Regulation and Development) Act, 2016 (Rera) implementation, together with good monsoons, cooled off prices across the country by 2-3 per cent on an average in the immediate months of the new regime. It is expected that prices will continue to remain low during the second quarter until the bulk of dealers move over to the new framework.

Sector analysts opined that the northern, central and eastern were particularly hit as most of the dealer base resorted to destocking in June in anticipation of and the pace of restocking is not satisfactory. Moreover, dealers, particularly in the tier 2-3 are still sceptical of the input credit affecting volume uptake.

"It is expected that prices will continue to remain subdued in the second quarter as dealers, mostly in the northern-eastern are yet to understand the implications and how to claim input credit," an analyst with brokerage firm Motilal Oswal said.

Based on channel checks, analysts are projecting that in the August-September period, prices are poised to be hit by 2-5 per cent across the five regions.

Act as well as requires tighter compliance norms which has affected construction activities by large real estate companies, which slowed down in the July-August period.

prices have been showing a declining trend since the beginning of the current financial year after the average prices peaked during April at Rs 307 a bag, rising by over four per cent, but then began to decline steadily, falling by 3.5 per cent in June i.e. the month just before the implementation. However, prices dropped by six per cent at Rs 289 a bag during July-August as compared to the April prices.

"Demand and supply has been sluggish post-implementation and the channel network suggests that sluggishness may continue for one to two more months. Sustained sand shortage and implementation will continue to impact sales," an analyst with Centrum Broking opined.

As per the analyst, owing to weak demand, primarily from the channel partners, average trade segment prices (pan India) fell three per cent on a month-on-month basis and trade prices corrected by two per cent in the north and southern region, three per cent each in central and eastern region and by four per cent in the western belt.

He said the price correction in the west has been sharper as prices rose in Pune belt last month against the national price decline implying a higher base correction for the region.

"Overall, dealers are indicating that the steady progress of the and the impact of as well as would further moderate offtake. However, marketing executives remain upbeat that a good would lead to better offtake during the second half of the current fiscal year," the analyst said.

Apart from GST, and good monsoon, the impact of sand mining also pulled down prices particularity in Uttar Pradesh, Madhya Pradesh and Tamil Nadu region.

However, company executives are hopeful that the sand shortage owing to several bans by the National Green Tribunal (NGT) will get sorted out by substituting artificial sand in the near future.

"Eventually, M-Sand will become an organised sector and the government is expected to sort out the sand shortage issue in due course," Vivek Chawla, CEO at Emami said.

M-Sand is a substitute for naturally occurring sand used in construction activities and is produced from hard granite stone by crushing.

Average price per bag in 2017

Cement prices to remain tepid as GST, Rera and monsoon hit demand

First Published: Tue, September 05 2017. 02:13 IST