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Cement is likely to get dearer by Rs 6-8 in Gujarat market within this month thanks to input cost pressure. Prices have already gone up in the range of Rs 10-12 per bag in the beginning of March after restructuring of duties on the commodity in the Union Budget of 2011-12.
Prices in Ahmedabad market is around Rs 260-265 for a 50 kg bag now for retail and around Rs 240-245 a bag in the wholesale market. "Prices in Gujarat and also adjoining Rajasthan (Jaipur) are at a three year high now", said an Ahmedabad based stockist and dealer of a leading cement brand.
Dealers in the region also noted that cement off-take in the region is picking up. "There is healthy demand for the commodity in Gujarat market, but along with it there is also a supply side control from major players. Together with this, the excise duty restructuring had also pushed players to raise prices earlier this month. We do not see prices going down till June, they are likely to remain firm.", said an Ultra Tech Cement dealer in Ahmedabad.
Cement consumption in Gujarat has approximately increased by around 12-15 per cent during 2010, compared to the year before. According to market data, the demand is pegged at 20-23 million tonnes during last calendar year. Major players in the region include Sanghi Cement, Binani Cement, L&T, Ultratech along with Ambuja Cement.
All India average price of cement has also gone up from Rs 220-225 a bag in December to Rs 265 a bag now. In Mumbai region prices are hovering around Rs 275-280 now, and analysts feel that they can further go up in the near-term.
Rise in input costs, especially that of coal has hit the cement manufacturers' margins. While coal prices have gone up by around 35 per cent on a year-on-year basis to $130 a tonne now, prices of gypsum and fly ash are also up by around 20 per cent. Freight costs too have increased by around 12 per cent. On top of this, cement makers feel that the excise restructuring in this year's budget would put an additional burden of Rs 3-4 per bag.