Cement prices decline 7.3% due to lack of demand in December

Average cement prices declined sharply by 7.3 percent in December 2015 compared to the same month in the previous year mainly due to weak demand, says a research report. All India average cement price currently ruling Rs 285 - 290 per bag compared to an average price of Rs 308 per bag in December 2014, the report by Reliance Securities said. Northern and western regions have witnessed maximum correction between 10-12 percent.

However, Eastern and Central regions corrected by 6 to 10 percent on year-on-year basis. Notably, prices remained resilient in the southern markets barring Andhra Pradesh and Telangana, despite poor construction activities. The region has witnessed marginal 1.4 percent jump in prices from Rs 345/bag in December 2014 to Rs 350/bag in December 2015, the report said.

Prices in the western region corrected significantly by 7 percent month on month basis as most of the pockets have witnessed a severe correction owing to low activity and volume push, it said. The demand environment continued to remain dismal mainly on account of absence of pickup in private investment cycle, labour and water issues in many pockets, negligible pickup in real estate activities, and delay in regulatory clearances across the country, Reliance Securities Research Analyst Binod Modi said. Cement prices are expected to recover from this month as most of the dealers believe that prices have bottomed out and they are already being hinted for a price hike in days to come.

Nevertheless, demand scenario is expected to pick-up from 2016-17, he added.