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Cement prices surge by Rs 15-20

Ahead of new system of deliveries in south, dealers hike prices

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Cement prices in the state have gone up by Rs 15-20 in the last ten days. The price increase comes in the wake of a new system of deliveries based on cash payment effected by cement companies in the south on April 1.
The industry expected the new system to come into effect only in the second week when the stocks in the markets would be dried up. However, the dealers had supposedly hoarded the stocks and made profits by raising the prices.
The current prices per bag are Rs 135-140 in Hyderabad, Rs 133-138 in Vijayawada, Rs 148-152 in Visakhapatnam, Rs 150-153 in Chittoor, Rs 128-132 in North Telangana, and Rs 152-155 in Srikakulam. The prices in Bangalore, Chennai and Thiruvananthapuram are Rs 165-170, Rs 160-165 and Rs 180 respectively.
The existing prices at the time of announcement of the new delivery system were Rs 118-120 in Hyderabad, Rs 120-122 in Vijayawada, Rs 140-142 in Visakhapatnam, Rs 132-135 in Chittoor, Rs 112-114 in North Telangana and Rs 146-148 in Srikakulam.
In the other states, the prices were Rs 150-155 in Bangalore and Chennai and Rs 160-165 in Thiruvananthapuram.
Since April 1, cement companies in the south brought in a new system under which all the earlier discounts were dispensed with. Deliveries were to be made only at net delivery prices specified by the cement companies and on cash payment.
Only cash discounts are to be offered for periods not exceeding a fortnight. If the stock is lifted on immediate cash payments, the companies will offer a discount of 3.5 per cent. Three per cent discount is to be offered on payments made in a week and 2.5 per cent discount is for fortnightly payments.
There are not to be any discounts for periods exceeding 14 days, industry sources said.
The net delivery prices being insisted by the companies at various cities in the south are Rs 140 in Hyderabad, Rs 153 in Bangalore, Rs 162 in Chennai and Rs 175 in Thiruvananthapuram, sources said.
The net delivery cost prices in Andhra Pradesh are Rs 140 in Hyderabad and Vijayawada, Rs 146 in Visakhapatnam, Rs 150 in Srikakulam and Chittoor, and Rs 135 in the North Telangana districts of Warangal, Karimnagar, Nizamabad and Adilabad.
While, the new system's impact is yet to be felt by the market, market prices are expected to rise Rs 6-7 more than the net delivery prices at respective places in the next one week, sources said.
Earlier, industry observers had expected April to be an exception with depressed prices due to elections.
However, their expectations were belied by the dealers' move, which came as a surprise. Any resistance by the dealers to the new cash-based delivery system is estimated to be minimal and for a short period.
The industry's confidence ensues from various demand factors that have sprung up of late.
The factors are said to be a drop in cement supplies from other states, good potential for exports from Andhra Pradesh and several new infrastructure projects that will kick off this financial year.
Sources, however, pointed out that the industry was not going in for a kill in the current circumstances. The cement companies had earlier arrived at an informal understanding to effect a gradual hike in prices, by about Rs 10 a month, sources added.


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