Efforts are on by major players to contain the problem and ensure that the price management system that they had put in place does not go haywire. But with Monsoon likely to set in by the end of this month, possibility of further fall in prices from the current levels of Rs 180 per bag looks imminent, say industry experts.

Post-elections the demand in Andhra Pradesh took a beating which resulted in sharp fall in prices from Rs 145 levels to Rs 115 levels per bag. The fall in demand and consequently the price made it very attractive for producers in AP to sell in TN and Kerala where prices continued to be in the region of Rs 180.

As a result cement in largequantities flowed in upsetting the demand-supply position. Priya, Vishnu, Panyam, Maha and Duncan are some of the brands that have been pumped into the state. According to industry sources, cement to the tune of over 50,000 tonnes have entered the two states in excess of the stipulation fixed by the manufacturers among themselves.

To add to the woes of the manufacturers, the September demand in the region has not been as brisk as August. The industry grew by about 12 per cent in TN and Kerala for the period April-July. This trend was more or less maintained in August also. But leading manufacturers have reported sharp fall in September despatches. Elections are being attributed as one of the major reasons for the decline in demand as government projects have been held up with most officers being on poll duty. Builders have also held back construction in anticipation of a price fall and ban on sand lifting by the Kerala government has affected the demand there.

High prices in TN and Kerala has also given afresh lease of life to mini-cement plants which were close to extinction. They are now in the market selling their brands at prices as low as Rs 130 per bag. Though their sales are insignificant in terms of volume, the overall sentiment of the market has been affected. Public sector cement companies such as Tamil Nadu Cements Ltd and Malabar Cements have also managed to increase their market share taking advantage of high price of popular brands.

Cement manufacturers agree that it would be an uphill task on their part to maintain prices at the present levels. They hope to tide over the next three months without a major decline in prices till the demand picks up from mid-January and are banking on the co-ordination between major producers in the region to achieve this.