ALSO READStrike:Bank ops hit in 4K branches in Andhra Pradesh,Telangana FTAPCCI proposes 2 incubation centres in Andhra, Telangana Cabinet approves amendments in the Central List of Other Backward Classes applicable to Andhra Pradesh and Telangana Telangana govt wants ownership of Andhra Bhavan land in Delhi India's youngest state Telangana gets 21 new districts
Cement prices have increased by Rs 30-40 per bag in the West, North and Central markets over the past few months despite a sluggish volume growth, a report said.
"All-India cement prices improved by Rs 3 per bag m-o-m (month-on-month) to Rs 332/bag (of Rs 50 kg) in October 2016, led by price increase in Western region. Prices have increased by Rs 30-40/bag in West, North and Central markets over the past few months. However, volume growth remained sluggish," said a report by Kotak Institutional Equities.
On the demand side, heavy monsoon rains played a spoilsport and industry volumes increased by only 2.3 per cent Y-o-Y in July-September 2016 after 6 per cent growth in Q1 FY17.
Maharashtra, a major market, witnessed a sharp rise in cement prices, Rs 24 per bag, in October.
Prices also remained firm in Andhra Pradesh/Telangana region after significant increase of Rs 55/bag in September 2016, raising the prices in the southern region to Rs 369/bag.
Prices in the North, Central regions saw marginal changes from the previous month, while rate movement in the East remained flat as it was for over a year now.
"If October prices sustain for the rest of the quarter, we expect players in the West (+ Rs24/bag), South (+ Rs24/bag: especially for AP/Telangana region) to see an improvement, while North (- Rs10/bag) and Central (- Rs5/bag) will see marginal declines," the report said.
"We expect headwinds from over 50 per cent increase in pet-coke prices. Poor volumes and rising costs may offset the already factored increase in cement prices for pan-India players.
Pet-coke prices have risen to USD 84 per tonne in October 2016 from USD 53/tonne in Q1 FY17. Given the large usage of pet-coke across companies, we expect substantial increase in fuel cost for most cement names, it added.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)