Cement prices firm despite monsoons

Cement prices firm despite monsoons
Published: 22 June 2006

Cement prices are showing no signs of abatement despite the arrival of the monsoons in some parts of the country. Usually, cement prices go down during the monsoons due to decline in demand, as construction activities slow down. Analysts and dealers FE spoke to expect the prices to remain firm despite a government warning to companies against charging abnormally high prices. They also expect a further hike in cement price by Rs 5 per bag from July 1. "Cement prices may further rise even during the course of the monsoons. Last year, cement prices did not decline during the monsoons. This time they may rise again, since cement companies have that kind of a pricing power," says Rajan Kumar, an analyst for Networth Stock Broking Ltd. A few cement companies had hiked prices on June 15 by Rs 3-5 in Mumbai. Dealers said a few other companies raised it again on Tuesday in the same range, but this was done more as a brand adjustment exercise. "Monsoons are slightly delayed. 
 
 So the construction activities are still going on, creating the demand," said a Mumbai-based analyst on the recent price hike. At present, cement is selling around Rs 225 - 243 for a 50-kg bag in Mumbai. A Chennai-based dealer confirmed that retail prices rose by Rs 10 a fortnight ago and is selling at around Rs 180 - Rs 200. On the outlook, Meenal Sikchi, an analyst with Care Ratings said, "Post-monsoon, construction activities pick up again. So, there might be an increase in prices."