Andhra Pradesh cement prices hit rock bottom, India

Andhra Pradesh cement prices hit rock bottom, India
Published: 30 November 2009

Cement prices have hit a low in Andhra Pradesh, one of the largest markets in the country, and some other States due to slackening demand and entry of new players.

The price range of cement now ranges between Rs 140 and Rs 170 (ex-godown price) across States and in some regions (like Andhra Pradesh), it even dipped to Rs 125-135 band, according to the industry sources.

“The fall in the prices is unprecedented and compared to same period last year, the price is down by over 20 per cent, even though the prices vary in different markets,’’ a senior official of Dalmia Cements told Business Line.

According to Mr S. Srikanth Reddy, Executive Director, Sagar Cements Ltd, the significant dip in the price would impact the margins of the companies as the price is expected to remain on the lower side for some more time. “This is a national phenomena,” he said.

“Some may disagree with me. But, I feel the pricing will scale up to last year’s level only in the first/second quarter of next fiscal,’’ he said.

One relief for the industry, however, is status quo in the input costs.

“In the last six months, there has been no hike in raw material prices,’’ Mr Reddy added.

According to Mr Balaji, Chief Financial Officer, Bharathi Cement Corporation Ltd, further dip was not possible as the ‘prices hit the rock bottom.’’

The industry would see ‘better days’’ from next year as demand picks up, he added.

Mr Ramesh Chandra, Managing Director, Bheema Cements Ltd, said there was some panic in the industry as cement despatches fell in September.

“However, in October, they improved to over 17 lakh tonnes from 15.5 lakh tonnes in Andhra Pradesh. As per the initial estimates, the despatches could go up to 19 lakh tonnes in November. So, along with demand, the price will again go up,’’ he said.

While North Indian markets are also witness to slackness in demand, in Orissa, the demand is picking up due to hectic work on infrastructure projects, the Dalmia official said.

Our Chennai Bureau reports: However, some manufacturers see prices increasing over the next few weeks.

They say there has been an increase of Rs 7-15 a bag in the western region over the last week.

Except Andhra Pradesh, all the other States in the southern region are showing good growth in consumption because of which prices would increase. Demand in the North too was picking up.