Cement prices to rule firm, production growth may dip

Cement prices are expected to rule firm while its consumption slowdown is likely to limit production growth in the next two quarters, an economic think-tank said.        

"We expect coal cost-pressure for cement companies to ease on a sequential basis. Yet, at the prevailing levels, coal prices are substantially higher than their year-ago levels. This coupled with increased prices of other key inputs would continue to keep cost of production of cement companies on the higher side," the Centre for Monitoring Indian Economy said in its monthly review here.        

Cement prices in Mumbai increased by about Rs 3 per 50 kg bag to Rs 256 in the last week of September 2008.

As a result, average cement prices in the month of October 2008 showed an increase of Rs 2 per bag.        

Prices in Kolkata corrected by Rs 2 to Rs 244 per bag, declining for the second straight month. Average cement prices in the cities of Chennai and Hyderabad remained stable at Rs 278 and Rs 232 per bag, respectively, during the month.        

After slowing down in the month of August 2008, cement production was up by a healthy 8.6 per cent in September 2008.

Production remained sluggish in the western and central regions that recorded either a decline or a modest rise in production.        

Contrarily, the southern, northern and eastern regions clocked a growth of 12-15 per cent each, driving the overall production growth during the month.