Steep hike in the prices of construction material, especially of cement, has served a serious setback to the construction industry in Kerala. During the last couple of months, the price of cement has increased by 30-40 per cent, taking the cost of a bag of cement to Rs 200-210 from Rs 155-160 till a couple months back.
Cement dealers told local press that this was a regular practice of manufacturers to increase the price during March-May, the period when the construction activity peaks in the state.
Industry sources said that the heavy demand for cement all over the country meant an inevitable price hike by manufacturers as there is a huge demand-supply gap.
The state depends on the manufacturers in Tamil Nadu for 90 per cent of its cement requirements. With the construction industry booming in Andhra Pradesh and Tamil Nadu, there is a tremendous growth in the consumption of cement in the two states like elsewhere in the country. Consequently, the factories in the two states are more keen to supply cement to their domestic consumers than to those in other states due to logistic advantages and prospects of good profits. Curtailing their supplies to states like Kerala, the manufacturers are concentrating on states like Andhra Pradesh where the cement price has touched the sky with 100 percent increase.
Another reason for shooting cement price is suspension of supply from Gujarat a couple of years back. Due to heavy demand in the North, factories in Gujarat have stopped supply to Kerala. Cement stockists attribute the acute cement shortage and steep price to fall in supply. Some manufacturers are said to have been supplying only half of the state’s requirement for the last four-five weeks. As a result, the cost of building material has increased by 15-20 percent.
"If the price spiral continues, we will be forced to stop our activities for the time being" said a supervisor of a major construction company in Kochi.
Malabar Cements and Cochin Cements cannot meet more than 10 percent of the state’s cement requirements in the state. The two companies are also hiking prices in tune with those of the neighbouring states. [Business Standard]