The report added, volumes are growing over 10 per cent YoY in North, East and Central India, while demand has remained weak in the South and Maharashtra.
Prices in Maharashtra are up by around 10 per cent at Rs 354 a bag, supported by higher prices in the South, which is a key supplier to the state. The same for Gujarat remained steady QoQ (up 3% YoY) at Rs 350 a bag. As a result, prices in the West are currently up 1% QoQ (6% YoY) at Rs 352 a bag.
Led by strong demand, prices in the North have risen by Rs 13 to Rs 389 a bag, up by around 7 per cent. Prices in Central India have also risen by around 5 per cent to Rs 356 a bag. Demand is North and Central India has gained momentum as monsoons subside. While some softness in demand has been observed in the last few weeks due to the festive season (Diwali and Chhath), it is likely to now pick up as migrant labour returns to construction sites.
Pricing in the East has been weak, declining by Rs 25 a bag since May2020. Cement prices
have declined ~2% QoQ due to the festive season. However, prices are marginally higher YoY at Rs 324 a bag. Due to the supply overhang, East has also seen the weakest pricing among all other regions in the past three years, with current prices lower than those 3 years back. The rest of the country, meanwhile, has seen an over 10% increase in prices in this period.
Demand in the East has been the strongest of all regions supported by government spending as well as increased labour availability as migrant workers returned to their hometowns due to the Covid-19 pandemic.
“The cement industry has started recovering slowly from May 2020, given the pent-up demand and the improved rural demand.
During the first quarter of FY21, the Andhra Pradesh and Telangana governments restarted their infrastructure projects and housing for poor schemes. With further relaxation of lockdown measures, there are expectations of increased public spending on rural infrastructure, irrigation, road building and other projects. This, along with a pick-up in individual home building and construction, is expected to improve cement demand,” N Srinivasan, vice-chairman and managing director, India Cements said.
Cement prices, which started improving from the month of April this year, sustained during the second quarter under review with only marginal aberrations in some of the southern states. These improved prices along with the cash and carry policy of the company which helped in improving the profitability and the liquidity in these troubled times, said Srinivasan.
With the improved selling prices, the net plant realisation (NPR) was up by 11% as compared with the previous year.
The company's capacity utilisation in the first quarter was at 35 per cent and it improved to 53 per cent. For the first half of the fiscal it was 43 per cent.