New capacities in South may dampen prices, India

New capacities in South may dampen prices, India
Published: 20 March 2009

Cement prices in the South may come under pressure with 12.3Mt of additional capacity scheduled to go on-stream by 2009-end, the Hindu Business Line reports.

Companies contributing to the increase in capacity are Dalmia Cement, India Cements, Madras Cements, UltraTech Cement and ACC. Small cement mills in Andhra Pradesh are also on course with their expansion programmes, which will further add to oversupply. Though new capacities are added, it takes at least 6-10 months for new plants to stabilise production.

After a lull between October and December, demand picked up in last two months following various infrastructure projects announced by the Government.

On the back of supply constraints and demand from the government projects, prices in the South were up by Rs5 (on a 50kg retail bag) to Rs270 while for bulk buyers it increased by Rs3 to Rs265 a bag in the last fortnight.

Though cement prices are on the rise, analysts expect them to drop by at least 10 per cent in 2009-10. Mr Vinod Juneja, Managing Director, Binani Cement, said, "Most wagons used for transporting cement have been diverted to foodgrain procurement which has caused disruptions in supply. Cement prices rose by Rs5-10 a bag."