Cement prices are going southwards. From an average all-India price hike of Rs.25/bag, the month of November saw an average price cut of Rs.13/bag, with South seeing the biggest fall at Rs.18 and East at Rs.17/bag.

Market traders are usually a very impatient lot and any such news, they rush in to sell. So, should you be selling off your cement stocks? No way! The cement sector has never had it so good and those in the sector predict more price hikes are round-the-corner; this is but just a blip.

Look at this reasoning and decide for yourself. Prices fell because:

• Retail demand was muted
• Festivals means low availability of labour
• Marriage season, harvesting in rural India also muted demand
• Work was at a low level, meaning low demand.
• Higher cement prices and higher costs of other construction material meant demand was posptponed
• Lower sand availability in Bihar added to the woes
• Ban on construction activities in Delhi
• Heavy rains in South India

How do the prices look in December?

• Prices might remain on the lower side in Dec too. Why?
• Seasonally, this is a weak month
• Govt run projects will largely remain unaffected as they have a FY22 deadline to keep
• Being the last month of the year, retail demand as such remains low
• Winters in North India keeps construction activity low

Towards the end of the year, some pockets could see a price hike – Eastern and Southern India mainly.

Logic points that this price drop is a seasonal phenomenon; the underlying trend is a rise in price. If Omicron does not cause too much havoc, Q4FY22 will make up for the low activity in Q3. And then of course, seasonally too, Q1 and Q2 will be very good. Let’s underline all optimism, even long term, with the threat of the virus. Barring uncertainty, sab theek thak hai!