Truant monsoon dampens cement prices

Truant monsoon dampens cement prices
The Hindu Business Line, August 18, 2009, Page 2

Rs 8-10 fall in prices of 50-kg bags.
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“The poor monsoon has also led to erratic power supply in Rajasthan where many cement companies are located. Though there is captive power back-up, we cannot completely depend on it.”
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Suresh P. Iyengar, Mumbai

The weak monsoon has taken its toll on cement prices which are down Rs 8-10 a 50-kg bag in the southern market and by Rs 3-5 in the western and eastern regions.

Prices were more or less stable in the North on the back of good demand for projects relating to the Commonwealth Games and Metro. “We were not able to raise prices in the northern region despite good demand because of cheap imports from Pakistan,” said an executive of a Delhi-based cement company.

The average cement price across the country is now Rs 265 a bag.

Mr Vinod Juneja, Managing Director, Binani Cement, said the prices in the North would also start falling if the rains continued to play truant. “The poor monsoon has also led to erratic power supply in Rajasthan where many cement companies are located. Though there is captive power back-up, we cannot completely depend on it,” he added.

Mr A. K. Saroagi, Chief Financial Officer, JK Cement, said the progress of the monsoon in the next couple of weeks would play a key role in cement demand.

Additional capacity

Besides the dismal rains, the additional capacity of nearly 50 million tonnes expected to be commissioned by the end of this fiscal will exert pressure on prices.

The Aditya Birla Group companies, UltraTech Cement and Grasim Industries, together commissioned 4.1 million tonnes in the first quarter of this fiscal.

Ambuja Cement has targeted completion of its 4.4 million-tonne clinkerisation project at Chhattisgarh and Himachal Pradesh by September-end.

ACC is planning expansion of seven million tonnes at its plants in Bargarh in Orissa, Wadi in Karnataka, and Chanda in Maharashtra.

Most cement company shares were down on Monday. ACC fell five per cent to Rs 790 while UltraTech, Shree Cement and JK Cement lost three per cent each to Rs 720, Rs 1,500 and Rs 111. Grasim Industries and India Cements shed two per cent each to Rs 2,582 and Rs 131 respectively.