Cement firms extend production break

Cement companies have decided to extend their 10-day production holiday across the country, following delay in the expected rise in demand and prices.

The production halt, already in its 13-day, will be extended by at least another week, senior industry officials said.

The companies had frozen output on November 28 for 10 days, but fresh supply in the major market has still not resumed.

Industry sources said, "The companies had decided to freeze output to push up prices and to reduce their huge inventory pile-up. But since the expected demand increase has not taken place, production is likely to remain suspended until next week. We will again review the situation next week."

Earlier, two years back, a major cement player had formed a virtual cartel and halted production across all facilities.

That step had resulted in a steep jump in prices, at even close to 40 per cent in some regions.

Since the output freeze, retail cement prices in Mumbai witnessed an increase of Rs 10 per 50 kg bag at Rs 160, while Pune, Nagpur, Andhra Pradesh, Karnataka saw a Rs 5 per 50 kg bag increase.

At the time the production holiday began, companies had about 5.85 million of clinker and around 1.35 million tonne of cement as inventory. However, analysts are not sure what is the existing inventory position.

While the ruling retail cement prices in Pune are between Rs 135-Rs140 per 50 kg bag, in Nagpur prices are at Rs 120 per 50 kg bag, after last week's hike.

In Andhra Pradesh, retail cement prices increased by Rs 5 - Rs 7 last week to stand at Rs 135, while in Tamil Nadu, the 50 kg bag in the retail segment is available at around Rs 162 - Rs 165.

Meanwhile, the ruling price in Rajasthan is around Rs 115 - Rs 120 per 50 kg bag and New Delhi is at Rs 125 per 50 kg bag. However, the prices in the eastern region have remained stable.