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All-India average price down INR 7 per 50kg bag in February 

Our discussions with dealers, sales executives, and C&F agents suggest the usual excitement surrounding price increases during Q4 has been absent. This can be attributed to lower-than-expected demand, increased supply and a competitive pricing trend. As a result, all-India average retail price fell INR 7 per 50kg bag MoM to INR 375 in February vs an average MoM increase of INR 5 per bag for the past three years. MoM price movement across regions was as follows: South India saw the highest price cut of INR 13/bag, followed by INR 8/bag in East India, INR 6/bag in North India, INR 5/bag in West India and INR 3/bag in Central India. On the demand side, although most pockets witnessed MoM recovery, it has been below the desired levels. Market intermediaries anticipate a more favorable demand trend in March, but any major price hike seems unlikely, due to anticipated increase in volume pressure in the upcoming weeks, driven by year-end factors.

Prices drop across North and East India; Central India a mixed bag

Price corrections across Central, North and East India have been in the range of INR 0-10/bag MoM. In Central India, prices in Western Uttar Pradesh dipped INR 5/bag MoM while Eastern Uttar Pradesh was flat MoM. On the other hand, prices in Madhya Pradesh were down by INR 5/bag. In North India, prices in Delhi fell by INR 10/bag, followed by INR 5/bag drop each in Rajasthan and Punjab. Cement prices across East India fell for the fourth consecutive month in February. Bihar, Chhattisgarh and West Bengal fell INR 10/bag each. Prices in Jharkhand and Odisha dipped INR 5/bag each.

South India prices continue to fall

The southern pockets saw price cuts of INR 5-20/bag in February. Price correction in Kerala was the highest, down INR 20/bag, which was followed by a fall of INR 15/bag each in Andhra Pradesh and Telangana. Tamil Nadu saw a price drop of INR 10/bag, followed by INR 5/bag fall in Karnataka. Price cuts have been much sharper for regional brands as dues from government projects have blocked working capital.

In West India, Gujarat softens, Maharashtra mixed

Gujarat prices softened by INR 10/bag MoM in February after being flat for the past two months. However, Maharashtra was mixed, with a flat trend in Mumbai and Nasik while Nagpur prices fell INR 5/bag MoM.

Outlook: favorable cost trend to ease pricing weakness impact

Volume push in March may overshadow price hike efforts; thus, the industry is unlikely to see any material price hike prior to April. However, the pricing impact is expected to be partly offset by lower cost due to operating leverage benefits and weak fuel prices with thermal coal prices down ~31% from the peaks of mid-October.

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