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MOSL: CEMENT-Seasonal price correction across most markets

​CEMENT: Seasonal price correction across most markets

• July and August 2017 have seen MoM cement price correction across most markets due to seasonal weakness and pass-through of rate differential in taxes following the implementation of Goods and Services Tax (GST).
  
• Price correction in July/August has been the highest (INR15-20/bag) in Pune/Nagpur markets, but very limited (less than INR5/bag) in the north and central markets.
  
• Correction from the 1QFY18 average price has been the highest in the north and south markets.
  
• North and central markets witnessed healthy demand growth in July on account of a favorable base and smooth GST transition. However, the south markets witnessed 4-5% YoY decline due to sustained demand weakness from TN market. Demand growth in the east was largely flattish.
  

Seasonal weakness in pricing: All-India cement prices in July/August 2017 have corrected MoM (by INR8/bag) due to seasonal weakness and pass-through of rate differential in taxes following GST rollout (rate of 28% for cement). Prices corrected by INR16/bag MoM in the west, while correction in most other regions was less than INR10/bag.

Highest price decline seen in Pune/Nagpur: Cement price correction MoM has been the sharpest in Pune/Nagpur (by INR18-20/bag) due to weak demand. Price correction has also been high at INR15-20/bag in Bangalore and Chhattisgarh. The decline in Chhattisgarh has been more predominant due to price cap enforcement by the government.