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| Cement prices show no sign of softening |
| Chandan Kishore Kant / Mumbai Feb 09, 2010, 00:15 IST |
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After rising in Nov and Jan, there was an increase of Rs 3-5 a bag last week.
 Cement prices are again on the boil. After a series of rises since November, a fresh round of price increases, effective from February 1 by almost all manufacturers has pushed the rate up by Rs 3-5 for a 50 kg bag, pushing the average national price to about Rs 235. In November, the average rate was Rs 210-215 a bag.
Dealers and companies’ sources told Business Standard that on the back of better than expected growth in demand, the market has the capacity to absorb the latest hike. And, the say, there is further room for a similar rise during the peak construction season.
ACC, Ambuja, UltraTech and Grasim, said dealers, have increased rates by Rs 4-5, while small regional companies have managed to push up the price by at least Rs 3 a bag.
Industry experts said the unexpectedly high demand for cement, which hit double-digit growth in December and is likely to see the trend continue for some months, has kept at bay the earlier apprehensions of less growth in the second half of the current financial year, on the back of a high base effect on a year-on-year basis.
In Mumbai, the country’s largest cement consumption centre, prices are at Rs 255 a bag. Real estate and other construction activities have visibly picked up in Mumbai, enabling companies to find buyers even at higher prices, said analysts.
Its is Rs 230-245 a bag in Tamil Nadu and Kerala, while Karnataka is witnessing about Rs 210 a bag. It is much lower in Andhra, at Rs 165 a bag, partly due to the ongoing political turmoil, which has hit transport and also economic activity.
Southern markets, though, have seen the sharpest correction (rises) since last year between the regions.
The North is relatively stable and prices continue to remain firm at around Rs 235. The central and eastern regions have seen strong price firming. According to trade sources, the current prices in the central region are as high as Rs 260 a bag. In Jharkhand, Bihar, West Bengal and Orissa, these are between Rs 240 and Rs 245.
Cement makers had good earnings during the December quarter. January saw an average price rise of around Rs 10, which went as high as Rs 20-25 in certain pockets.
Industry experts said such hikes can be sustained up to May. “By that time, recently commissioned capacities will get stabilised and put pressure on companies to cut prices,” said an analyst.
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