Cement prices, which were hiked in Mumbai last week by Rs 5 per 50 kg bag, are expected to fall to the earlier levels due to lack of demand, cement dealers said. The fall in prices is also due to increased supply with many southern cement players diverting their product to the western region.
Cement prices across the country have continued their downward trajectory for yet another month, but this time at an accelerated pace, particularly in the southern markets. Prices in Hyderabad are currently as low as Rs 115 per bag.
After a spurt in prices in the beginning of the year, cement prices pan-India barring Mumbai has started declining since April onwards due to low demand.
Amish Raja, a stockist in Amravati, said, ?There is no offtake of cement in the Vidharbh region. Moreover, from the past six to seven months, cement from southern markets players like Deccan Cement and Sagar Cement have started flooding the western region leading to more price fall. Prices are expected to fall further,? he said. Cement majors including UltraTech and ACC among others had already hinted at prices coming under pressure in the coming days. Cement prices in Andhra Pradesh are currently hovering around Rs 115-185 per 50 kg bag, down by Rs 60-70 per bag from its peak two months back. Prices in the east declined from Rs 300 per bag.
?The cement players have formed a cartel and hiked the prices in Mumbai. There is no demand at all,? said another dealer.
Dealers believe that prices in south India could fall further in the coming weeks as demand shows no signs of revival. Prices in central, northern and eastern regions have also started to decline as demand dips. Shree Cement CMD HM Bangur had earlier told FE, ?Due to active monsoon this season and less working hours, the consumption has flattened and weak demand is expected to continue in July-September quarter as well. However, the positive impact of good monsoon will be visible from Q3 onwards and I expect 9-10% demand growth in Q3 and Q4 of FY2011,? he adds.
ACC had hinted that capacity addition by the cement industry, especially in the southern region, coupled with the onset of monsoon has caused some stress in the market.