Fifth cement price hike being mooted

Fifth cement price hike being mooted
Published: 29 December 2009

After hiking the prices four times in 2009, Indian cement companies are getting ready to hike prices one more time in the last quarter of fiscal 2009-10.  The prices are likely to rise during the remaining period of the current fiscal on the back of high demand owing to infrastructure spending and a revival in the real estate sector. “I think the cement sector will continue with its price-hike spree due to the shortage of railway wagons and logistical problems in various regions. Our survey shows that the cement industry has increased prices four times in all regions this year (2009), but in the last year (2008), they had done it just once or twice due to prior demand in some of the regions. We expect there would be one more time in order to strengthen their bottom-line in the fourth quarter of the financial year,” Angel Broking analyst Rupesh Sankhe said.

“Cement prices are a direct off-shoot of the demand-supply situation and the market forces determine the price in a particular market at a particular time. Many a time, cement manufacturers may not even have a say in the retail prices as there are multiple layers of distribution channels and even short-term surplus and deficit in a particular market can impact the prices there,” said Vinita Singhania, managing director of JK Lakshmi Cement and president of Cement Manufacturers Association (CMA).

Binani Cement managing director Vinod Juneja said, “I think some companies may jack up prices soon due to many reasons. Our industry understands that a price rise is purely dependent on demand and supply. If input costs of power, logistics, wages and raw materials go up, then no cement company would sit on the existing prices. So I expect there would be an average increase of Rs 4-5 per bag in the fourth quarter and would remain with an upward bias till the monsoon appears.”