Cement prices may rise Rs 10

Cement prices may rise Rs 10
Published: 22 November 2005

India’s top cement makers are likely to raise prices in the west, north and south, mainly on strong demand. Mumbai-based ACC has already increased prices between Rs 2 and Rs 5 per bag to cash in on strong seasonal demand. Other cement firms are likely to follow suit soon.  Industry experts expect an increase of around Rs 5-10 per bag in the October-December quarter, when cement prices move up on increased construction activity. "Cement prices have already gone up by Rs 2-5 in western India (50 kg bag) and the trend is likely to sustain," a senior ACC official said. 

Analysts predict that prices will rise further, as consumption in India grows at more than 8% on demand from housing and infrastructure sectors. In terms of prices, only the eastern region is slack, while markets in the north, west and south are doing well on price and demand, the ACC official added.  The absence of new capacity addition in the industry is also a factor that could tighten supply. Brownfield expansion and de-bottlenecking of plants that are being carried out are expected to add marginally to the output. The cement industry operates at around a 90% capacity utilisation, and any increase beyond this is unlikely, it is learnt. 

"Manufactures, particularly in the north and west, may not be able to meet incremental demand and this might result in a further increase in prices," analysts said. Retail cement prices have touched Rs 180 per 50-kg bag in Mumbai, while the price for institutional and bulk buyers is about Rs 165 after the latest price increase, industry sources said. In Gujarat and Pune, prices range between Rs 150 and Rs 155 per bag.  According to a Gujarat Ambuja Cement official, prices normally go up due to strong demand at this time of the year.