With the month of December usually showing the marked increase in consumption levels in a year, retail cement prices are slowly moving upwards in anticipation of higher demand levels in Andhra Pradesh and a couple of other southern states.
While prices in Karnataka, which are already the highest in the entire southern region at Rs 220-225 per bag, are yet to see any change, they have increased from Rs 4 to Rs 8 per bag in Andhra, Tamil Nadu and Kerala in the last few days.
Unlike earlier years, the consumption level in Tamil Nadu has picked up from November last week itself as compared to the normal pattern of higher demand registering from the second half of January, according to industry sources.
Due to an early demand, the retail prices of cement in Tamil Nadu have gone up by Rs 4-5 per bag, which are now ruling between Rs 193-Rs 197 per bag.
Similarly, prices in Andhra have also increased by Rs 5-6 per bag with each bag costing between Rs 182 and Rs 187, depending on the grade and other factors. Kerala, which completely depends on imports, has also seen almost similar changes in cement prices, which are now ruling between Rs 210-Rs 215 per bag.
The growth in consumption levels in Andhra as compared with last year is clearly on the higher side.
According to industry estimates, cement consumption in AP was 12.1 lakh tonne in October this year as compared with 9.5 lakh tonne in the same month last year.
Last month, it was 12.60 lakh tonne as compared with 10.16 lakh tonne in October, 2005. Going by the current trend, the industry associations are expecting this month’s consumption levels slightly higher than January, 2005 level of 13.16 lakh tonne as compared with 12.55 lakh tonne in December, 2005.
Going by the production capacity available in the state, any demand beyond 13.5 lakh tonne may create a situation of supply-demand mismatch affecting the prices further in the state and elsewhere from January, they say.
While the massive housing programme undertaken by the state government, which supposedly requires as much as 3 lakh tonne of cement a month as per the action plan, is considered to have significant effect on the consumption levels, the reports from districts still show a poor response from beneficiaries resulting in the average monthly consumption of 15,000-20,000t by the weaker section housing programme, according to the state finance department officials.