Local analysts expect India’s demand (including exports) to increase by about 10Mt in the new calendar year and cross the 150Mt mark.
On the other hand, the installed capacity of about 155Mt is hardly expected to increase much this year. Most of the major expansion plans announced by cement companies, including Shree Cements’ 1.25Mt and Jaypee’s 3.5Mt, will materialise only by the end of 2008 financial year.
With many players, like Gujarat Ambuja, also catering to the export market, the scenario will add pressure on prices. Moreover, the increase in freight charges after the Supreme Court ban on overloading will also have an impact on cement prices. As such, experts expect prices to breach the Rs 200 mark by April.
In the southern region, where the prices are about Rs 155 per bag, the implementation of the VAT will push up the prices. Till now, tax differences among the southern states have kept the prices down. In the north, cement prices currently hover around the Rs 145 per bag mark. Nevertheless, backed by the increasing demand, the rising prices, the industry this year should clock nine per cent growth against the eight per cent rate last year.