Emkay Global Financial Services reported on the outlook of cement space. The month of January-11 has witnessed prices in Northern region come under pressure as the demand was affected due to severe cold. Eastern Central and Western regions saw a slight rise in prices in anticipation of demand momentum picking up towards the month end though certain pockets have shown slight improvement in off-take over the last month. While the Southern region continues to sustain its price levels led by strict production discipline.

Cement dispatches in December grew by 14 per cent y-o-y (twelve month rolling average growth at 5.4 per cent) much as expected due to low base of last year. Though the market is preparing for rises in anticipation of demand momentum and also due to the extreme cost pressures escalating further after Coal India's recent pricing  (estimated to increase energy prices by 28 per cent), it remains to see whether this would be equally supported by consumption growth. Hence it is believed that the sluggish demand and rising input cost pressures, the sector is unlikely to see healthy EBIDTA/tonne levels of Rs1000+. The recent cement price could just be enough to cover the cost pressures without adding incrementally to EBIDTA/t from Q4FY12 onwards.