Morning Equity Briefing
Construction and Housebuilding
Cement prices starting to rise in southern India
Barry Dixon
FACTS: Our sources in India are indicating that cement prices in the southern region increased by Rp20-40/bag (c.10%) over the past couple of weeks, reversing the fall in recent months. Prices across the rest of India have stabilised, apart from the west where prices have declined by a further Rp10/bag.
ANALYSIS: The rise in southern prices is surprising given the large capacity overhang, slower demand relating to the ongoing monsoon and a highly fragmented, and therefore competitive, market.
DAVY VIEW: The latest price movement may signal an end to the declines experienced in recent weeks as a result of slower demand and excess capacity. India remains one of the most attractive cement markets globally with double-digit demand growth likely to continue for a number of years. Better pricing is positive for Holcim which is the number-two cement producer in India and also for CRH which has operations in Andhra Pradesh in southern India.