Excess Cement From Rajasthan Affects Gujarat Market

The prices have come down from Rs 135-145 per bag to Rs 110.

According to analysts, the basic demand of cement in Gujarat is between seven and eight million tonne. Twelve per cent of which is met by Rajasthan. This is not because there is less production in the state but Gujarat exports cement and supplies it to Maharashtra too.

Excess supply from Rajasthan has caused cement stock in Gujarat exceeds the prevailing demand, said the analysts. Consequently, the prices came down from Rs 135-145 per bag to Rs 110, the analysts said.

The cut if it lasts will adversely affect price realisations as due to monsoons the offtake has already been hit. Cement majors, including Larsen & Toubro, ACC and Gujarat Ambuja, had recently hiked prices in the state to cushion themselves against the tumbling prices during the monsoons.

 

Cement prices have constantly been under pressure despite a bullish attitude contemplated by industry players. The analysts attribute this primarily to the demand and supply mismatches that have been frequently paralysing the sector in Gujarat.

Cement prices in Gujarat have in recent times been under severe pressure which has forced most of the players to take a major hit on their bottomline. Two high-profile takeovers: Grasim's acquisition of Shree Digvijay Cement and L&T's Narmada Cement : have both turned awry due to the lower-than-expected sales realisation. The recovery process chalked out by the two is expected to receive a major jolt, the analysts said.

The analysts also said that the price cut could have a ripple effect in the neighbouring markets and the recent price hikes announced twice over the last month could, to an extent, be rolled back.