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Cement prices rise QoQ despite softness in Nov’23

All-India average cement price down 2% MoM in Nov’23, but up 5% in 3QTD

? Our channel checks suggest that all-India average cement price declined ~2% MoM (INR7 per 50kg bag) in Nov’23, due to price declines across regions, except in the West. However, we note that average price in 3QTD is higher by ~5%, led by hikes in Sep-Oct’23. Cement demand was also subdued during the month due to festive holidays, labor unavailability, implementation of pollution control curbs and elections in some states.

? Regionally, a sharper price decline was seen in the East (down 4% MoM), followed by the Central (down 3%), the South (down 2%), and the North (down 1%). In the West, prices largely remained stable MoM in Nov’23. In the East, dealers have indicated prices may further drop in the near term due to a slow pick-up in demand and higher competitive intensity.

? Cement demand was subdued in Nov’23 and volume is estimated to have declined 4-5% YoY in Nov’23, partly due to a higher base of last year. We estimate industry volume to grow 6-7% YoY in 3QFY24, likely supported by a pick-up in demand in Dec’23.

? Imported petcoke price has been range-bound at USD125-130/t for the past few months. Imported coal (South African) price declined ~19% MoM to USD108/t. At spot prices, consumption cost stands at INR1.55/Kcal (imported Petcoke) and INR1.60/Kcal (imported coal).

Cement prices correct in Nov’23 as partial hikes rolled back

? Cement prices corrected in Nov’23 as hikes were partially reversed due to festive season discounts, price cuts and subdued demand. Notably, each region witnessed price increases in the range of INR10-50/bag in Sep-Oct’23. However, in Nov’23, a partial hike has been reversed in the range of INR5-15/bag.

? The East region saw average price decline of INR15/bag (down 4% MoM) in Nov’23. In West Bengal and Bihar, prices declined by INR15-20/bag. In Chhattisgarh and Odisha, prices fell by INR10/bag (each). Dealers expect prices may fall further in the East region in the near term amid subdued cement demand and higher competition intensity.

? In the South, average price declined by INR8/bag (down 2% MoM) in Nov’23. In Kerala, prices declined by INR10/bag, while in Tamil Nadu prices declined INR20/bag in the last week of Nov’23 amid intensifying monsoon. In Hyderabad, cement players announced up to INR5-7/bag discounts in the festive period, although it was withdrawn later.

? In the North, average price declined by INR5/bag (down 1.3% MoM), led by a price drop of INR5-10/bag in the Delhi-NCR and Punjab markets. In Rajasthan, prices remained stable MoM. In Central India, prices declined by INR10/bag (2.7% MoM), as price hike in Oct’23 was reversed in Nov’23. In the West, prices remained flat.

? Despite the rollback, all-India average cement price is up ~5% (INR18 per 50kg bag) in 3QTD, backed by hikes in Sep-Oct’23. Among regions, prices rose ~8% in the South, followed by East (~6%), North & West (~5% each) and Central (1.4%) in 3QTD.

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