Cement to cost more from Jan

Cement prices are expected to remain constant next month and will start picking up from January onwards, traditionally the busiest season for construction activity, a top industry analyst said.

"Dealers across the country expect cement prices to remain constant during the next couple of months and anticipate its prices to pick up from January, which is the busiest season for construction activity," Sandeep Nanda, senior vice president of brokerage firm Sharekhan, said.

"Any such price hike will augur well for cement companies," Nanda said, adding cement prices, overall, remained constant across the country.

Prices in Mumbai remained in the range of Rs 240-245 a 50-kg bag, whereas prices in Gujarat ruled at Rs 220 a bag.

"On speaking to our dealers, we have come to know that cement demand is weak at the moment as construction activity has slowed down. Workers have gone back to their home towns in Uttar Pradesh and Bihar to celebrate festivals," Nanda said.

Consequently, prices have remained constant at Rs 225-230 a bag in other leading states. In Andhra Pradesh, too, prices remained constant at Rs 220 a bag.

According to the Cement Manufacturers Association (CMA), producers have hiked prices in the north by two per cent with effect from October 1. The association also expects a tightening of demand-supply situation in the south of the country.

Cement despatches maintained their year-on-year (y-o-y) growth of nine per cent in October. Among the major producers, ACC and Ambuja Cements resumed their pre-monsoon level despatch figures.

ACC recorded a despatch growth of 6.7 per cent y-o-y to 1.76 million metric tonne (MMT), whereas that of Ambuja Cements grew 3.6 per cent to 1.48 MMT. As Grasim and Ultratech did not witness any capacity additions in the last one year, their despatch growth remained flat.

Amongst mid-cap companies, Shree Cement's despatches were fuelled by capacity additions and grew 25 per cent to 0.55 MMT, whereas JK Cement despatches rose by a healthy 59 per cent to 0.35 MMT.

During the first half of FY08, the western region was the fastest cement consuming region, reporting a healthy 18 per cent rise. This was followed by the southern and northern regions where consumption grew 12 per cent and 11 per cent, respectively, the Centre for Monitoring Indian Economy (CMIE) said.

While south and north reported a small surplus, the western zone emerged as a deficit region.

Cumulatively, till September 30, 2007, growth in cement production lagged consumption growth, CMIE said.