Cement: First signs of seasonal up tick in prices say Emkay

Emkay Global Financial Services has come out with its report on cement space. The research firm is neutral on cement space.

• Though cement demand in the region is yet to see a seasonal uptick, cement prices in the region have been hiked by Rs10-15/bag in the last one week. Dealers suggest that this is due to stocking up of the commodity in anticipation of demand pick up before the festive season.
• Dealers expect one more round of hike in the next 2-3 weeks.

• After a sharp fall of ~Rs40-45/bag from its yearly highs, cement prices in this region have been hiked by Rs10-15/bag in the last one week. We had highlighted in our August-11 note that the cement producers were trying to arrest the fall in cement prices by pushing price hikes which is now clearly evident in September-11.
• Demand however still remains at average levels but dealers suggest that in anticipation of demand pick up producers might hike prices further in the next few weeks.

• Dealers suggest that demand has remained at average levels but is expected to pick up post Durga poojan. In anticipation of this pick up Prices in this region have been hiked by Rs5-10 in the last one week with further hikes of Rs10 expected in the next few weeks.
• After a sharp decline of 15% in cement prices from YTD highs  witnessed in the month of July, prices in this region have been hiked consecutively in August and September and have surprised us positively.

• Though prices in Gujarat had witnessed some signs of recovery in August, cement producers have cut prices by Rs5-15/bag over the last one week impacted by sluggish demand. However dealers suggest that prices have almost bottomed out post this fall and will witness some stabilization in the coming weeks.
• Prices in Pune and Mumbai have increased by Rs5/bag although there is no real boost seen in demand backing up the hike.
• The issue of delayed auctioning of sand along with high prices continues to hamper construction activities, already affected by the monsoons Overall, we expect prices to stabilize from here on with hikes expected in the coming weeks in anticipation of better demand seen before the festive season begins.

• Though demand in the southern region continues to remain sluggish, pricing discipline displayed by cement producers has managed to sustain prices at almost same levels
• Prices have increased in selected pockets like Hyderabad on account of rollback of seasonal discounts given by cement manufacturers to dealers and has resulted in prices increasing by Rs8-10/bag in those regions. Dealers suggest that these discount rollbacks could also spread to other parts in this region. On an average prices in the region have remained flat.

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