Major cement companies in northern India have increased production by about 20% from mid-October to meet growing demand from the construction sector, an industry executive said Thursday. "There has been a surge in house construction, which has led to a sharp rise in cement usage," said the executive, who asked not to be named. However, the rise in demand hasn’t boosted cement prices due to the increase in supply, said the executive. The average cement price in north India is currently INR135 for a 50 kilogram bag.
Cement prices in India vary from region to region as demand differs and each state has its own level of taxes. It is also difficult for companies based in one region to sell cement in other areas as freight costs are high.
The executive said the recent rise in October cement sales countrywide was driven by northern cement companies. The cement industry reported a 17% on-year rise in cement sales in October to 10.60 million tons from 9.04 million tons last year. However the executive said that the increased production is likely to level-off by December. "This may lead to an increase in cement prices in January," he said.
Total annual cement output capacity in northern India is about 25 million tons, compared with capacity of 146 million tons across the country. Major cement companies in northern India include Grasim Industries Ltd, Gujarat Ambuja Cements Ltd, Associated Cement Companies Ltd, and JK Cement Ltd.