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Average Price Ended on a Flat Note in Nov’19; Down 1.3% QoQ in 3QFY20 QTD
* Contrary to the expectation, cement demand continued to remain soft in Nov’19, as persistent liquidity issues in several government projects and newly erupted construction ban due to pollution in select parts in Northern and Central regions played spoilsports. However, pent-up demand after festivals led improvement in the trade demand in several markets, which resulted in improved volume on MoM comparison. Barring select parts in Northern region especially in Punjab (Chandigarh & Amritsar) and Jharkhand (due to pre-election spending), the dealers across regions sounded negative about the demand in Nov’19 and expect bounce back in Dec’19.
* All-India average cement price remained broadly flat on MoM basis at ~Rs305-310/bag (+3.2% YoY) mainly led by 3.2% MoM price recovery witnessed in Southern region especially in AP and Telangana. Northern, Western and Eastern regions broadly ended flat to marginal improvement, while average realisation in Central region declined by ~2.4% MoM during the month. However, non-trade prices too remained broadly flat on MoM comparison in most pockets albeit with a widened gap in certain pockets due to soft trade demand.
* Dealers further opined that while they have been indicated by the companies for price hike to the tune of Rs10-50/bag in several pockets from the first week of Dec’19, it seems to be unlikely considering current demand trend and intensifying competition especially from the tier-two brands. f A look at the average region-wise price on YTD basis shows that industry’s average price is up by ~5.5% YoY, mainly led by 13% increase in Northern region followed by ~6% increase in the Central region. However, on sequential comparison, the average price for is down by ~1.3% QoQ in 3QFY20 QTD led by 1.5-2% QoQ price contraction in the Western, Central and Eastern markets.
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