Cement prices keep falling, not despatches

The prices of cement, the only commodity to see fall in prices for the last three months, dropped again in the last fortnight. Dealers in Kolkata, the only region where cement prices are going strong at Rs 270 for a 50 kg bag for retail buyers and Rs 265-268 for wholesale buyers, had been given an intimation by manufacturers that prices would be hiked by Rs 2-5 from November 16, but when the billing was done for this week prices were unchanged.

Three cement dealers in Kolkata to whom DNA Money spoke to, said the demand is good from the retail segment, but if prices are raised buyers may shy away. It is yet to be seen whether manufacturers would increase prices by December first week, they said.

Though the eastern market is the only place where price hike was a possibility, across the country prices have dropped again. In Delhi and nearby areas, where manufacturers were gung-ho about Commonwealth Games and infrastructure pick-up, wholesale cement prices have slipped to Rs 220 a bag for JK Lakshmi, Shree Cement, Jaypee Cement from Rs 225 on November 9.

For Ultratech, the Grasim subsidiary, the wholesale price is Rs 225, down by Rs 5. For retail buyers prices have fallen to Rs 225-229 per 50 kg bag.

H M Bangur, managing director, Shree Cement, told DNA, “Prices are falling but despatches are not going down. With prices falling so frequently the cartel will go away. And in no likelihood can prices be increased at this point.”

Even in Mumbai, where retail prices were quoting at Rs 250 per bag and wholesale at Rs 242-245, they have dropped to Rs 242 for retail buyers, a Sion based dealer said.
The figure could not be verified from the Cement Stockists and Dealers Association of Bombay.

The steepest fall has come in southern India where most of the new capacities have started production.  Though fully ramped up production would start from mid January, dealers say offtake is very bad. Grade A cement prices which were quoting at around Rs 245 per 50 kg bag for retail buyers in October last week fell to Rs 225-230 per 50 kg bag, down by Rs 10-20 depending upon the brands like Ultratech and India Cements.

Wholesale prices are down to Rs 200 from Rs 210 for Grade A. Dealers here said that they expect cement prices to fall by Rs 10-20 before December 2009 end.