Emkay uncertain about sustainability of price hike, India

Emkay uncertain about sustainability of price hike, India
Published: 10 September 2010

Cement stocks surged by about 5-15% in yesterday’s trade following news flow of price hike in the Southern region. In a knee-jerk reaction, cement manufacturers in south have intimated dealers that cement prices will be raised in key markets of Hyderabad and
 Chennai by INR 30-35 for each bag effective Sep. 7, 2010.



Cement prices in Hyderabad which were hovering around Rs 138-140 for each bag,
will go up to Rs 178-180 for each bag, an increase of Rs 30 for each bag. 
Similarly cement prices in Chennai market which were at Rs 175-180 for each bag
 will be raised to Rs 215-220 for each bag.



According to dealer survey conducted by brokerage house Emkay Global Financial 
Services, the sluggishness in cement off take and ample supply may make it
difficult for the markets to absorb a sharp price hike.

 The brokerage house’s interactions with the dealers suggest that over a period
 of the next couple of weeks, the effective price hike could be in the range of INR
10-15 a bag. It is of the view that the absorption capacity of the southern 
markets would be seen only in second-third week of September.