The 240-million tonne (mt) cement industry in India has seen prices moving up by Rs 5-15 per bag (50 kgs) since November last year in the southern and western parts of the country. This rise was on the back of logistics constraints created by shortage in railway wagons and supply disruption in Andhra Pradesh.
Prices in Uttar Pradesh, too, have increased by Rs 20 per bag in January alone. The eastern region, particularly Kolkata, has seen stable prices in January; however, over the next few weeks, dealers expect prices in Kolkata to increase by Rs 5-10 per bag.
Indeed, with the busy construction season setting in, cement prices are expected to increase further by 5-10% and the trend is expected to continue till June this year, say industry players. Historically, the January-March quarter has seen peak demand for cement, leading to enhanced utilisation levels across cement manufacturing units, say experts.
Agreeing that prices may rise further, Vinod Juneja, MD of Binani Cement, told FE, ?Cement prices pan- India are expected to move up by 5-10% till June this year. However apart from the increase in the demand, the rise in price will also reflect rising inflation.?
According to Juneja, ?There are all indications that petrol and diesel prices are set to increase as also railway freight charges. Moreover, prices of imported coal have also increased in the last quarter, resulting in rise in input cost for the manufacturers.?
Coal prices have increased to $95 per tonne from $55 per tonne in September 2009. ACC Ltd, India?s second largest cement manufacturer, during its results for the year ending December 2009, had said the company foresees some hardening of prices of critical inputs like coal and gypsum.
Currently, robust demand is being led by north and east India with a 15-18% year -on-year growth, driven by extensive housing and infrastructure construction in both regions , coupled with the forthcoming Commonwealth Games in Delhi. Hence over the coming weeks, cement prices in New Delhi are expected to rise by Rs 10 per bag in the institutional segment.
Declining to comment on the futuristic price movements, HM Bangur, CMD of Shree Cement Ltd, a major player in the Northern region, said, ?I foresee the prices remaining stable at the current levels.?
Dealer checks indicate that cement prices in southern and western markets have increased by Rs 10 per bag in January 2010. Dealers expect one more round of price hike by the end of February. In contrast, cement prices in Andhra Pradesh and Karnataka have remained stable at Rs 145?170/bag and Rs 215?220/bag (Bangalore), respectively.
?There will be pressure on prices in the South unless real demand picks up. After Pongal, construction activities pick up in the South, hence prices are expected to rise marginally by about 3-5% till June 2010,? a Dalmia Cement spokesperson told FE.