India: further hikes in cement prices ahead

India: further hikes in cement prices ahead
Published: 09 April 2009

While the prices of most commodities in  India have cooled, cement continues to buck the trend with prices being hiked several times last month, reports DNA India.

However, that’s not the end of it, say cement dealers. Prices are all set to move further up, they assert. Echoing their views was Paul Hugentobler, deputy chairman, ACC Ltd, the largest cement manufacturer in India. On the sidelines of the company’s annual general meeting on Wednesday, he said, "Prices will go up further because demand has picked up ahead of the monsoons." So a fresh round of price hike is inevitable.

DNA in the edition dated March 4, had reported that supply crunch was sending cement prices up. Requesting he not be named, a senior member of Cement Stockists and Dealers Association of Bombay (CSDAB) said, "There is a shortage of supply because demand has picked up considerably due to infrastructure and rural projects.

The shortage is also because railway wagons are not available as required and that is creating scarcity in the market." He said further hikes are coming but couldn’t provide specific figures.

The prices of both wholesale and retail cement have gone up by Rs 5 per 50-kg bag in Mumbai and by Rs 10 in Nagpur. In Mumbai, retail cement is available for Rs 270 per bag and wholesale for Rs 259.

A Vikhroli-based dealer said that prices are going up because of supply problems. "They will jump Rs 7-9 again in a few days," he said. The highest increase has been in Kolkata, where wholesale prices went up from Rs 245-256 in the beginning of March to Rs 265 now. Retail prices went up Rs 20 to Rs 268 per bag.

Requesting anonymity, an authorised dealer of the top four cement producers said, "Prices have shot up to Rs 268-270 and may go up to Rs 280 for wholesale." He, however, denied that demand had picked up. "People are not buying like they used to in the last two months. By reducing supply, bigger companies are creating a crisis in the market. They are not providing clinker to smaller loose cement producers, which is why even smaller manufacturers are unable to supply cement to the market."

In the south, prices have increased Rs 6-10. Last month, a hike had taken retail cement prices to Rs 270 but now, they’re up again at Rs 280. The jump was higher in wholesale prices at Rs 10-15 to Rs 275 a bag.

Dealers in the south expect demand to pick up before monsoons, especially from the infrastructure segment. "In March demand slows down and picks up in April and June before monsoons, when demand falls," said an analyst, who did not want to be named.

Meanwhile in the north, the jump hasn’t been too high.

Shailendra Chouksey, wholetime director, JK Lakshmi Cement, said, "In June-November last year, the northern region lost Rs 25-35 per bag. However, in December, prices went up again by Rs 20-25 per bag. Prices in the north are Rs 15-20 lower than in south or east."

Source: DNA India