Cement prices rise despite duty cut
The Hindu Business Line, March 2009, page 2
Supply constraints, transportation problems.
--------------------------------------------------------------------------------
Outlook
The all-India cement price is likely to reach Rs 245-248 by the month-end
Further hikes have been ruled out as the demand is decelerating compared to January-February period
--------------------------------------------------------------------------------
Suresh P. Iyengar
Mumbai, March 25 Cement prices have gone up by about Rs 10 a 50-kg bag in March owing to an increase in demand and transportation constraints. However, dealers expect demand to plateau at the current level, indicating that there will not be any further price increase for some time in major markets. The Centre cut excise duty by four percentage points to eight per cent in February.
Prices were hiked by Rs 3-5 a bag in the first week of March and again by Rs 5 a bag between March 16 and 20, said a city-based dealer. Together with the hike in March, cement prices in the last 6-8 weeks have gone up by Rs 12-15 a bag.
On an average, the all-India cement price, which touched Rs 239 a bag in last week of February, may reach Rs 245-248 by the month-end.
Though there was a marginal uptake in demand across regions, supply constraints and transportation problems have paved the way for the rise in prices.
Demand decelerating
In western regions including Mumbai, prices were increased twice by Rs 5 each in March to Rs 256-260 a bag. However, further hikes have been ruled out as the demand is decelerating compared to January-February period.
“Government-sponsored projects contributed for the major cement demand which is not stable. Many real estate companies have announced new projects, but we do not see any further rise in prices,” said a dealer.
Many projects, which were put on hold due to high cement prices, are being revived in the eastern region. In fact, in north-eastern region prices ruled firm at Rs 285 a bag after it was revised twice in March due to shortage in supply on the back of increase in demand.
Mr Vinod Juneja, Managing Director, Binani Cement, said, “Many railway wagons which were used for transporting cement have been diverted for food grain procurement. Of late, the problem has eased a bit.” Binani Cement had recently entered the Eastern markets.
Power cuts in South
Except for Bangalore, prices remained strong in the southern region including Tamil Nadu and Andhra Pradesh. Power cuts (one day a week) in Andhra Pradesh and Tamil Nadu has led to disruption in production schedules, said Mr Ajit Motwani, Research Analyst, Emkay Global Financial Services.
In the northern region, prices have gone up by Rs 5-15 a bag to Rs 235-Rs 240 in last two months with the pick up in demand from infrastructure projects such as Delhi Airport, Delhi Metro, besides preparation for the Commonwealth Games.
Prices are expected to remain stable at the current level despite softening of demand in the North (excluding Delhi and adjoining regions) and few parts of western region. It may go up marginally in the eastern and central region on the back of strong demand, said a dealer.
Mainline cement company shares showed a mixed trend on the BSE on Wednesday. While ACC and India Cement were up 2 per cent and 6.85 per cent at Rs 562 and Rs 103, Ultratech Cement and Grasim Industries closed almost flat at Rs 513 and Rs 1,552. Shree Cement and Ambuja Cement lost 4 per cent and 0.36 per cent to Rs 611 and Rs 70.
The Hindu Business Line, March 2009, page 2
Supply constraints, transportation problems.
--------------------------------------------------------------------------------
Outlook
The all-India cement price is likely to reach Rs 245-248 by the month-end
Further hikes have been ruled out as the demand is decelerating compared to January-February period
--------------------------------------------------------------------------------
Suresh P. Iyengar
Mumbai, March 25 Cement prices have gone up by about Rs 10 a 50-kg bag in March owing to an increase in demand and transportation constraints. However, dealers expect demand to plateau at the current level, indicating that there will not be any further price increase for some time in major markets. The Centre cut excise duty by four percentage points to eight per cent in February.
Prices were hiked by Rs 3-5 a bag in the first week of March and again by Rs 5 a bag between March 16 and 20, said a city-based dealer. Together with the hike in March, cement prices in the last 6-8 weeks have gone up by Rs 12-15 a bag.
On an average, the all-India cement price, which touched Rs 239 a bag in last week of February, may reach Rs 245-248 by the month-end.
Though there was a marginal uptake in demand across regions, supply constraints and transportation problems have paved the way for the rise in prices.
Demand decelerating
In western regions including Mumbai, prices were increased twice by Rs 5 each in March to Rs 256-260 a bag. However, further hikes have been ruled out as the demand is decelerating compared to January-February period.
“Government-sponsored projects contributed for the major cement demand which is not stable. Many real estate companies have announced new projects, but we do not see any further rise in prices,” said a dealer.
Many projects, which were put on hold due to high cement prices, are being revived in the eastern region. In fact, in north-eastern region prices ruled firm at Rs 285 a bag after it was revised twice in March due to shortage in supply on the back of increase in demand.
Mr Vinod Juneja, Managing Director, Binani Cement, said, “Many railway wagons which were used for transporting cement have been diverted for food grain procurement. Of late, the problem has eased a bit.” Binani Cement had recently entered the Eastern markets.
Power cuts in South
Except for Bangalore, prices remained strong in the southern region including Tamil Nadu and Andhra Pradesh. Power cuts (one day a week) in Andhra Pradesh and Tamil Nadu has led to disruption in production schedules, said Mr Ajit Motwani, Research Analyst, Emkay Global Financial Services.
In the northern region, prices have gone up by Rs 5-15 a bag to Rs 235-Rs 240 in last two months with the pick up in demand from infrastructure projects such as Delhi Airport, Delhi Metro, besides preparation for the Commonwealth Games.
Prices are expected to remain stable at the current level despite softening of demand in the North (excluding Delhi and adjoining regions) and few parts of western region. It may go up marginally in the eastern and central region on the back of strong demand, said a dealer.
Mainline cement company shares showed a mixed trend on the BSE on Wednesday. While ACC and India Cement were up 2 per cent and 6.85 per cent at Rs 562 and Rs 103, Ultratech Cement and Grasim Industries closed almost flat at Rs 513 and Rs 1,552. Shree Cement and Ambuja Cement lost 4 per cent and 0.36 per cent to Rs 611 and Rs 70.
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