India cement prices to plunge by December-end

India cement prices to plunge by December-end
Published: 07 November 2008

Cement prices in the country are likely to fall by Rs 10 from December-end onwards on account of deteriorating demand, say industry players. Meanwhile, some dealers in Mumbai have started offering a discount of Rs2-3 per bag due to weak demand.

A 50kg bag of cement at present costs between Rs 244 to Rs 255 in Mumbai.

“There is no demand and we are seeing a dip of 40% in our business this year against last year, which is forcing us to sell cement at a discount,” said a Mumbai-based stockist. Moreover, housing, which accounts for more than 65% of cement consumption in the country is slowing down, denting demand.

“If the demand slowdown continues in future, then a price cut is possible,” said KC Birla, CFO, UltraTech Cement. However, when asked whether UltraTech will also cut cement prices, he said, “We have not yet witnessed this situation so far.”

Wholesale prices have not come down so far, but retail prices have started taking a dip, it is learnt. Moreover, in the North-East, prices are expected to fall by Rs 10, said Bijay Garodia, MD, Barak Valley Cement Ltd. Prices in the North have already taken a dip, and those down South are also expected to fall, say experts.

The 204 million tonne (mt) cement industry is going through challenging times with oversupply and softening demand exerting pressure on prices. Cement dispatches by firms like Ambuja Cement for October fell 3.98% to 14.21 lakh tonne over last year. ACC Ltd’s dispatches for the same period stood at 1.70 mt, down 3.41% from last year. Aditya Birla Group’s cement dispatches last month grew marginally by 1.93% at 25.37 lakh tonne.

Although incremental addition to capacity in FY2008 was not large, the domestic cement industry is expected to witness substantial bunching up of capacities in FY09 and FY10, as 86.5 mt capacity is expected to come on stream during these years.