Cement prices tread up again

Cement prices have risen by Rs 5-15 per 50 kg bag over the last few days in many parts of the country. The maximum increase was in Bangalore, where rates have shot up by Rs 15 in the last three days.

Retail prices there are in the region of Rs 215-220 and the wholesale rate is Rs 203-205 per bag. The price hike here was led by UltraTech, Zuari Industries and other A-grade players.

Even in Chennai, prices have been hiked by Rs 10 per bag in the last one month, leading to a price band of Rs 230-232 for retail and Rs 175-190 for wholesale buyers.

A Chennai-based dealer said demand has shot up since December. “We have seen a strong growth of over 20% in demand. Today (on Monday) itself prices have been hiked again.

The rate is 80-85%, with work on 7-8 main projects such as the over 1-million-square-feet Secretariat building, expansion of the metro corridor, outer ring road, airport expansion and construction of 11 bridges inside Chennai city boosting demand.”

Dealers in Chennai expect cement consumption to go up by 1.5 lakh tonne from June, taking the average monthly figure to 6.5 lakh tonne per month.

Rates in the eastern region, mainly Kolkata, are back to their recent highs of Rs 280 per 50 kg bag for retail consumers and Rs 275 for wholesale. UltraTech, Lafarge and Ambuja Cements increased prices in last three days. Last month prices in the region were Rs 260 for wholesale and Rs 265-270 for retail.

In Mumbai, too, prices have been hiked by Rs 5, bringing the retail rate to Rs 270 per bag and wholesale prices to Rs 255, said a senior official from the Cement Stockists and Dealers Association in Mumbai.

Analysts attribute the rise in prices to easing concerns over the surge in supplies from the central and northern regions.

Rupesh Sankhe, research analyst with Angel Broking, said the inter-regional transfer was not more than 4-5 million tonne. “The sentiment is improving as supplies from north and south are not coming.”

In the north, too, prices jumped a week back. They currently quote at Rs 230-235 for wholesale and around Rs 240 for retail buyers, said Shailendra Choksey, wholetime director of J K Lakshmi Cement.

“The demand in the north is good and we expect it to remain stable in the coming quarter too,” he added. Sankhe said utilisation rates in the north are the best, at 98% followed by 86-87% in the east, 82-84% in the west and 73% in the southern region.

“Though we expect an upside of Rs 4-5 per bag in the northern and eastern region in the next four months, prices should start falling by Rs 10-15 from May-June”.

Another analyst from an international brokerage who did not wish to be named said the rise in prices is a short-term phenomenon. “Most of the new capacity will be ready from May, which will pull down prices.”