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MOSL: CEMENT- Major rollback of prices in South/East, marginal in other regions; Declining costs to cushion fall in margins

CEMENT: Major rollback of prices in South/East, marginal in other regions; Declining costs to cushion fall in margins

 

• All-India cement prices declined ~2% MoM in Aug'19 led by continuous price declines in the southern and eastern regions. Prices in the South/East declined ~3% MoM and are now 8%/5.5% lower from 1QFY20 average. Our checks indicate that the industry is attempting a price hike of INR20-30/bag (6-10%) in the South; however, given the weak demand environment, we believe sustainability of the same will be tested.
• While trade prices remained stable MoM in Central India and only 1% MoM lower in the North, non-trade prices corrected by 4-5%; thus, indicating a fight for volumes in the bulk segment even as trade demand remained weak. Prices in Central/North are 1%/3% lower from the average of 1QFY20.
• Prices in the West declined 2% MoM due to ~4% MoM decline in Maharashtra; prices in Gujarat remained flat. Prices in the West are 2% down from 1QFY20 average.