Cement likely to get dearer this Diwali

Cement likely to get dearer this Diwali
Published: 25 October 2007

Cement prices in Mumbai could rise by Rs 3-5 per bag this Diwali, inching closer to the Rs 270 mark. Dealers are learnt to have got feelers to this effect from manufacturers.  
A K Saraogi, chief financial officer, JK Cement said, "Pricing depends on market forces and input cost are increasing. As a result, there could be an increase of Rs 3-5 per bag during Diwali days."  
Notably, retail cement prices have already increased by Rs 5 per bag across the country over the last three months, notwithstanding the monsoons. Prices in Mumbai have been around Rs 262 since end-September.  
Cement prices elsewhere in the country, too, are set to rise, from the current Rs 213-220 in Delhi, Rs 215-220 in Lucknow, Rs 200-210 in Rajasthan, Rs 220-230 in Gujarat and Rs 215-220 in Indore. Prices in Andhra Pradesh and Tamil Nadu have already risen by Rs 5-15 per bag.  
Housing accounts for 65-70% of the total cement demand and will continue to remain a major contributor.  
Analyst Jaspreet Singh and Milan Wadkar at Anand Rathi Securities said in a note to clients on August 27 that consumption in the northern region grew by 10.5% in FY07 and 8% in Q1FY08 on the back of robust demand from Rajasthan, Punjab, Haryana and Uttaranchal. The growth momentum is likely to continue going forward on the back of robust demand as new capacities of Grasim-Aditya and J P Associates, which can have a material impact on the demand-supply equation, are expected to stabilise only by H2FY09, owing to which the supply constraints would continue. The robust trend in cement off-take is expected to continue going forward as well, on the back of strong demand from key states of AP, TN and Karnataka, said the analysts. 
India is the world’s second-largest cement producer with an installed capacity of 165 million tonnes. According to reports, the country will start commissioning an added capacity of 80 million tonnes in the next two years due to infrastructure development and house construction boom.