Cement prices rebound to pre-demonetisation level: Icra

Cement prices have recovered this month and have rebound to the pre-demonetisation level, according to market research firm Icra.

After demonetisation, the prices which had been negatively impacted in three regions -- west, south and east -- have rebound, Icra said in a statement adding that in the north they remained relatively stable.

Cement volumes had declined by 10 per cent during November 2016 to February 2017 compared to the corresponding period previously, due to demonetisation, it added.

However, in financial year 2017-18, Icra expects cement demand to grow by around 4 to 5 per cent driven mainly by the infrastructure segment through housing, road and irrigation projects.

"Going forward, we expect prices to be supported by a marginal improvement in capacity utilisation. The slowdown in new capacity addition and improvement in the supply-demand scenario in FY 2018 should support capacity utilisation levels and thereby cement prices," Icra Ratings Senior Vice President and Group Head Sabyasachi Majumdar said.

However, he also warned that the rising costs continue to put pressure on profitability indicators for cement manufacturers in the coming quarters.

In markets like Ahmedabad, cement prices, which had declined by 17 per cent during October 2016-January 2017, started to rebound from February 2017 and increased by around 19 per cent to Rs 265 per bag in April 2017.

Similarly, in Hyderabad, there was a hike of Rs 60 per bag, which is 27 per cent growth on month-on-month basis and pushed the prices up to Rs 325-330 per bag.

While, in north, cement prices in April 2017 were up around Rs 60 per bag on month-on-month basis, pushing the prices up to Rs 325-330 per bag.

"This has largely been driven by a supply moderation and pricing discipline," it added.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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