Volume trajectory remains weak in for cements
Even as the government is looking to push the infrastructure sector the growth in the cement sector is expected to remain weak in the year ahead. Industry volumes for the cement sector saw a 13.3% yoy decline in January 2017, the worst headline numbers for the sector in recent times, even as we remain hopeful that relaxation of cash withdrawal limits will likely improve volume trajectory from 1QFY18. Cost-side pressures are easing with prices of pet-coke coming down by US$10/ton in February 2017, though its benefit will only reflect beyond 1QFY18, a cement research report by Kotak Institutional Equities said. “All India cement prices remained unchanged at Rs321/bag in March 2017, dragged down by weakness in South (-Rs12/bag mom), even as other region saw price increases of +Rs5-7/bag mom. Price weakness in South was on account of Rs30/bag mom decline in Andhra Pradesh/Telangana even as prices in other states of South India remained largely unchanged. Cement prices in 4QFY17 will likely face Rs8/bag qoq decline in prices,” it added.
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