Cement prices may go up this month

The price of a 50-kg bag of cement may go up by as much as Rs 9 this month as the new coal pricing mechanism adopted by Coal India has increased the production cost for makers of the building material, Crisil Research said today.

"Cement players will try to pass on the cost increase resulting from the new pricing policy adopted by Coal India w.e.f. January 1, 2012. Hence, we believe that pan-India cement price is likely to rise by 2-3% in January, 2012," said Crisil Research Head Ajay D'Souza.

Deviating from its earlier practice, CIL started pricing coal on the basis of gross calorific value -- the energy produced by burning it -- with effect from January this year. Earlier, the price of coal was fixed on the basis of the moisture and ash content present in coal.

 

The average price of a 50-kg bag of cement fell by 1% in December vis-a-vis November to Rs 285, despite strong 13.4% growth in demand vis-a-vis the corresponding month last year to 20 million tonne.

"The improved pace of construction activity would also support demand growth during the month, aiding price rise," D'Souza added.

During the April-December period of the current fiscal, the country's cement consumption grew by 5.9% to 160.3 million tonne from 151.4 million tonne in the same period last fiscal.