Expect cement prices to recover in Dec-Jan: Ladiwala

Cement stocks were trading quite strongly for sometime but, they have started showing cracks and some of the big names have recently corrected. Sanjay Ladiwala, President, Cement Stockists & Dealers Association of Mumbai said cement prices have weakened across India due to the weak monsoon. Due to the delay in rains, the usual price fall in June was felt in August as demand weakened, added Ladiwala.

The price correction was particularly steep in Eastern India and Andhra Pradesh, reiterated Ladiwala. Moreover, he expects prices to correct further in September. According to him, price recovery may start in December-January.

Here is the edited transcript of the interview on CNBC-TV18.

Q: What has happened in August in terms of prices? Have they started softening with rains picking up?

A: That is true. Across the board we are seeing softening of prices and that’s not unusual during this season, as we know the monsoon have set in a little late so this should have happened in July but because of the late monsoons it is now being felt in August. So there is nothing new about it.

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Q: Is rains the only reason why prices have started coming off or are there other issues to do with weak demand etc?

A: Rain causes weak demand because the demand comes off by about 50%. We haven't seen more than unusual degrowth in demand in any of the sectors. It is the normal decline which is due to the monsoon primarily. So yes, it is the monsoon which is affecting the prices.

Q: Can you quantify how much prices have come off in the month of August across regions in the west and the north?

A: In the north it has come off by about 10-15%, depending on which area of the northern region it is. West is lower at about 10%. The maximum impact is seen in the east because the prices have gone up substantially. We see prices coming off about 15-20% there because there was much more headroom. In the south also it has come off about 10-15%.

Q: Can you break that up in the key markets like Andhra Pradesh, Uttar Pradesh and tell us where the maximum damage has happened?

A: Andhra Pradesh is where the maximum damage has happened. Surprisingly, it is followed by some northern markets around Ludhiana, Delhi and northern Uttar Pradesh. This is where we are seeing it come off the maximum. Luckily, Gujarat and Maharashtra are still pretty steady compared to the rest of the country.

Q: What is the outlook for September and October now after what has happened in August, do you expect more price correction?

A: In September I do expect price correction because now we are feeling the impact of the monsoon and it is going to be some time till demand picks up. It's actually November when the demand will start picking up, by which time the prices would have reached their bottom and then December-January onwards we should see a slight increase in prices. I do expect it to go around further.