Cement prices in Gujarat are set to rise by another Rs10 per bag. This hike, which is expected to be effected from the beginning of March, will take retail prices in the state to the Rs 170 levels. The demand situation in the state, which had been languishing from long, has seen a revival from December last year. The state saw a demand of 1Mt in December and is expected to do around 800,000-850,000t in January, which will however be lower when compared to December figures. Analysts say that December despatches in the state were the highest in the last 21 months. Industry observers expect a good demand in the region to prevail for some time. First, housing construction in the state has picked up after a good monsoon after a lag of three years. The Sardar Sarovar Canal project is also consuming between 50-60 thousand tonne of cement a month and the incremental demand is expected to last for some time, analysts said.
The recent additions to the Gujarat capacity have been the Sanghi plant and the re-opening of Narmada Cement’s Jaffrabad unit after over a year. L&T, Gujarat Ambuja and Grasim control over half of the Gujarat market. While Gujarat Ambuja has nearly a 24 per cent marketshare, L&T has 22 per cent, while Grasim along with its subsidiary Digvijay Cement controls around 10 per cent of the market. Analysts add that the proposed hike will be absorbed because the companies tend to regulate supply. According to a recent report by Icra, the cement industry which has been witnessing a surplus position for a long time, is likely to see a decline in the extent of the surplus in the immediate to medium term. This will be more pronounced in the northern and eastern region as compared to the southern and western region.