Real estate news on Cement prices head south in August

Building materials, Price Trends
Posted on Aug 22, 2012
In July, cement prices headed north in most States. Now they are heading south. The slide is marked in Andhra Pradesh, where a 50-kg bag has lost between Rs 20 and Rs 25.

If the prices touched Rs 300 a bag in Hyderabad and Rs 320-330 in the Rayalseema districts, it hovered around Rs 270-275 a bag in the past week. Even in Karnataka, Maharashtra and Tamil Nadu, prices which ruled high last month have seen a comparatively fall of Rs 15-20.

Two major factors are seen to contribute to this downward spiral in the Andhra Pradesh market. There is a sudden excess capacity created in the market with the launch of new brands — Jaypee Cements, JSW, Jaya Jyothi and Bhavya. Simultaneously, there is a slackening of demand. “The excess availability and low demand, coupled with the continuing shortage and high price of sand are instrumental in the drop in the cement prices,” according to S.V.S. Shetty, Chief Executive Officer, Anjani Portland Cement.

The usual trend in monsoon is lower offtake, but the demand in the State is much lower this time than in the same period last year, he told Business Line.

With August-September normally considered lean months for cement, indications are that the large number of players have to slug it out in the market. “We expect a price range of Rs 265-275 holding in the coming weeks. The challenge for cement companies is to sustain a viable price band,” said S. Sreekanth Reddy, Executive Director, Sagar Cements.

There are some positive signals from the realty sector, where recent approval of large projects could shore up the demand from October. In the southern market Andhra Pradesh is leading, with a steep fall in prices, he added.

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