The Centre for Monitoring Indian Economy in its monthly report said that cement prices are expected to weaken across cities in the second half of 2009-10.
CMIE said that "Cement prices are expected to weaken in second half of 2009-10 because huge 35Mt of fresh cement capacity will come onstream, which will put pressure on the realizations of companies.”
It said that the southern region which will add around 19Mt of new capacity, will witness the maximum pricing pressure. In the north, infrastructure development activity for the Commonwealth Games in 2010 will keep the demand strong and restrict price fall.
In fact, the cement prices softened in August. After being on an uptrend for six consecutive months, cement prices fell in August in most cities.
In the Mumbai market average wholesale prices were ruling at INR 257 per 50 kg bag, INR 3 lower than the high of INR 260 per bag. The cement price was ruling at INR 253 per 50 kg bag in August 2008. It went up to INR 260 per bag in May and June 2009.
In the south prices fell in the range of INR 4 to INR 12 per bag. However, prices continued to rise in the north and the east due to a strong demand.
CMIE said the leading cement producer ACC’s production is expected to grow by nine per cent in FY 10 driven by a strong demand from the infrastructure projects and housing construction.