Indian prices may decline next quarter

Indian prices may decline next quarter
Published: 22 December 2009

Indian cement prices are likely to fall early next quarter, especially in the weak southern market, as the Indian building commodity industry grapples with the near-term effects of additional capacity, said RP Gupta, chairman of mid-sized Shiva Cements told ET on Monday.

"There will be pressure on selling prices due to large capacity addition...India’s (total) capacity could reach 270 million tonnes by (fiscal year) 2011," said Mr Gupta. The current total installed capacity of the Indian cement industry - considered to be world’s second fastest growing market after China - is 240 million tonne.

Shiva Cements, is partly owned by ACC, India’s second largest cement company. "While cement prices in eastern India will remain stable, it could likely fall in most other places," said Mr Gupta. "The fall could be in double figures in a few pockets in south India, while in northern and western India, it will remain volatile," he added. Cement is highly zone-specific and competitive industry where the cost of travelling hinders movement of the commodity. So a manufacturer in western India, typically sells his product in the western market alone, unlike other commodities such as steel, which is sold everywhere irrespective of the manufacturer’s location.