Cement Sector Update - Tracking monthly cement prices across the country By JM Financial
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HIGHLIGHTS
Average cement prices witnessed a moderation of 3% MoM in Nov’21, following a weakness in demand. The prices have declined across regions. Region-wise prices in East (-5% MoM), West (-5% MoM) and North (-4% MoM), have seen a sharper drop relative to other regions. In comparison with 2Q average, average cement prices in Oct-Nov’21 are higher by 3-8% across regions.
The commodity costs have come off significantly from their peaks with pet-coke at c.USD200-210/t, international coal at c.USD 160/t and diesel at INR 87/l. However, higher costs will continue to impact the margins in the forth-coming quarters as the consumption cost is still lower than spot prices. The volumes through railway freight witnessed a sharp drop of 19% MoM in Nov’21 owing to temporary headwinds. Going forward, the cement prices are expected to witness an increase as the companies try to maintain margins (input cost pressures) and the demand traction improves.
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