Analysts say that the main reason for this dumping by the Rajasthan based cement manufacturers is the low offtake in the region. This is largely on account of the severe drought.

Meanwhile, the demand in Gujarat had already been under severe pressure because of very low retail demand. However, the producers have tried to maintain the prices at levels of Rs 140 per bag by cutting down on production.

Analysts see the price fall in Gujarat effecting prices in Mumbai and other western centres, as the only difference in prices in Mumbai and Gujarat are the freight cost and taxes. The price fall, analysts add, will have an impact on players in the western and the northern region and companies like Ambuja and L&T are likely to bear the brunt of this decline. ACC, however, is likely to be insulated to the extent of its larger spread out market (Maharashtra, Karnataka, HP, West Bengal and Bihar), analysts added.

The low cement prices are expected to continue only till the second-quarter, after which the prices are likely to rise back to steady levels. Market sources, however, say that the southern markets will continue to be insulated and prices are unlikely to dip significantly.

A good monsoon will however allow the players to regain lost ground as retail demand will pick up (80 per cent of the cement demand comes from retail segment), they added.