With the pick up in rural demand for building material, cement prices have surged in Delhi and Mumbai by Rs 25-30 per bag.
With the pick up in rural demand for building material, cement prices have surged in Delhi and Mumbai by Rs 25-30 per bag. All the major brands including UltraTech and Ambuja Cements raised their prices last week, cement dealers told Financial Express Online.
While in Delhi and Mumbai, tier-1 brands UltraTech, ACC and Ambuja are selling their 50-kg cement bag at Rs 345-350, other brands like Shree Cement, JK Lakshmi are selling the same at Rs 310-315 in both the cities.
Dealers based in the national capital cited the pick up in rural demand as the main reason, as this is the harvesting season. Besides demand, escalation in input costs has also led to spike in prices, according to marketing executives at cement companies.
“While there is an uptick in rural demand as this is a harvesting season and also a time when people renovate their houses as wedding season takes off during this time, there has also been an increase in input costs. Transportation, raw-material and electricity, everything is expensive during this time,” a marketing professional with a cement company told Financial Express Online requesting anonymity.
One of the dealers based in Mumbai said that the demand is quite robust not just in the commercial capital but all across the state of Maharashtra.
According to the cement makers, April has always been a month when the prices are increased as it is the first month of the financial year and also a construction season.
“Being the construction season we expect a pick-up in government infrastructure activity along with a rise in cement prices. Softening costs, however, might slightly push up profitability, brokerage firm Anand Rathi said in a report this week.
Other reasons for spur in cement demand are government thrust on low-cost housing, increased spending on infrastructure and other reforms it undertook like Real Estate (Rural and Development) Act or RERA and Goods and Service Tax among others.
According to Reliance Securities, cement demand has been quite impressive with double-digit growth in January, while it tapered off a bit in February led by substantial price hikes in select markets and higher inventory level at dealers’ level. “Though demand improved substantially on MoM basis in Mar’19, it was moderate on YoY basis owing to higher base. As per our channel check, all regions barring Northern and Eastern regions witnessed sequential price hikes in the range of ~2-8% mainly led by substantial price hikes in Southern and Western pockets.”