Cement may cost 5-10% more in a month, India

Cement may cost 5-10% more in a month, India
14 December 2004


Firming up of cement prices post-monsoon, usually considered natural, is delayed this time by about a month. A 5-10% growth in cement prices is expected in the next two months.

Associated Cement Companies (ACC) executive director-marketing, AK Jain, said: “Compared with the base levels in October or early November, we will see a firming up of prices in the next couple of months.”

In line with the bull run in the markets and on the back of the peak season, cement stocks have been showing strong growth lately.

The combined market capitalisation of all cement stocks on The Stock Exchange, Mumbai (BSE) has grown by over 35% in the last six months to Rs 34,888 crore, while that of three major companies—ACC, Gujarat Ambuja and Grasim—has increased by over 25% to Rs 23,353 crore.

Mr Jain added that housing continues to be the major driver of cement demand and prices in India. He also expressed the hope that the infrastructure sector will pick up speed in one year and play its role in generating cement demand.

Cement Dealers Association president, Sanjay Ladiwala, confirmed that there has been some delay in cement price rise this season. He expects prices to increase by Rs 5-10 in December and by another Rs 5 in January. Beyond that, the price hike would be to a lesser extent.

Mr Ladiwala sees scope for demand from infrastructure and could be the driver, going forward. Analysts agree on a strong firm-up in cement prices, particularly in the January to March period. They find the housing sector to really propel demand.

Cement prices have already moved north in northern markets like UP. They are firm in the eastern markets while in the south, they have firmed up after an earlier fall.

In late November and early December, cement majors in western India had hiked their prices for 50 kg bags. Gujarat Ambuja’s stock price has increased by 34% over the past six months to Rs 380, while that of ACC has climbed 30% to Rs 314. Grasim, a diversified conglomerate, has shown comparatively modest growth of 18% to Rs 1191 over the same period.

Smaller cement companies have registered a stellar growth over their smaller base prices six months ago.

Hyderabad Industries grew 471% to Rs 143, Visaka Industries grew 250% to Rs 135, Shree Digvijay Cement rose 217% to Rs 69, Jaiprakash Associates up 62% to Rs 166, while Shree Cement grew 56% to Rs 250.5.

Published under Cement News