India: cement prices may soften in 2H

India: cement prices may soften in 2H
Published: 09 July 2009

After Indian cement prices remained firm during the first half of the year, backed by robust despatches,  prices are set for a correction in a month’s time.

With around 45 million tonne (mt) capacity coming up this fiscal, and with the monsoons setting in, the prices can go down Rs 3-10 for a 50 kg bag, feel insiders. The southern and western regions should see the maximum corrections while prices in East and North are likely to be more or less stable. India presently has an installed capacity of around 224 mt.

Prices are now down Rs 2-3 a bag due to the seasonal demand slump seen during monsoons, confirmed Vinod Juneja, managing director, of Binani Group of Industries that owns Binani Cement. As for southern India, where additional capacity to the tune of around 60 per cent of its existing capacity is coming up, the prices could be down Rs 5-10 a bag starting August, felt a Mumbai-based analyst. “The price cut may not be announced at one go. The cuts could be in sequences,” he added. Presently, the region has the highest price of around Rs 275 a bag. Around seven to eight million tonne capacity has come onstream in the first quarter of the fiscal, said Pawan Burde, an analyst with Mumbai-based Angel Broking.

H M Bangur, president of the Cement Manufacturers’ Association(CMA) and managing director of north India’s leading cement player, Shree Cement, however, is of the opinion that the Budget’s thrust on infrastructure should push demand and hence keep prices firm. “The construction activity for the Commonwealth Games just around the corner will start now. Together with it, there will be additional demand created by the rural infrastructure projects and the industry has already created capacity so that there is no shortfall in supply,” Bangur said.