Cement sales volume increases 10-30% sequentially in June
MUMBAI : Cement demand surged sharply in June with the ease of economic restrictions in several states. However, extreme rains in some pockets, especially in the eastern and western regions, impacted economic activities, Reliance Securities Ltd. said.
According to channel checks carried out by the brokerage firm, cement sales volume improved 10-30% on a monthly basis in June, supported by the pre-monsoon and pent-up demand. Analysts at Reliance Securities Ltd expect the average price across India to improve 5.2% qoq in the first quarter of FY22, mainly thanks to a strong improvement in the southern region.
“The average price of cement across India has remained at ₹335-340 per bag in June, mainly supported by a 2.6% month-on-month improvement in the Northern region. Average prices in the South, East and West regions contracted by 1% MoM, while prices ended on a flat note in the Central region, “he said. .
While a sharp rise in sand prices has started to weigh on demand for cement in some pockets, traders remain confident of sustained volume in the coming months, which will however depend on the intensity of the monsoon.
Non-trade prices continued to hold up during the month, being relatively less volatile compared to trade prices. While the average difference between commercial and non-commercial prices has contracted marginally, the price differential remains in the order of ₹30-80 per bag, the brokerage firm said.
Analysts also said price hikes taken in early June were subsequently reversed as demand was not favorable enough to support higher prices.
While dealers expect further price increases of around ₹10-20 per bag in the next few days in most pockets, analysts said this is unlikely to happen due to the impact of the monsoon. “We believe companies would focus more on maintaining current prices at least for the next two months,” the brokerage added.
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