Cement prices may rise as input costs look up

Cement companies are looking at hiking the price of a 50 kg bag by Rs 5 from July 1 on account of a rise in coal prices and increased freight rates.

Although cement majors Gujarat Ambuja Cement, Grasim Industries, ACC and Larsen & Toubro have not formally announced the rise in price, industry sources said cement stockists have been intimated about the move.

However, the exact quantum of the price hike will be worked out on the basis of area and demand. "Cement companies will not be able to absorb the steep rise in coal prices coupled with a hike in diesel prices. The impact will be passed on to the consumer," sources said.

However, cement dealers in the city told Business Standard, "Offtake has slowed down considerably in the last few weeks due to monsoon and retail cement bags are already being sold at a Rs 5 discount to the company price. It is unlikely that any price increase would be effective in this season." In Mumbai, retail cement prices are currently being sold at Rs 160-163 for a 50 kg bag.

Dealers expect that prices will roll down further by Rs 5 in the first week of July.

A cement industry analyst said: "Retail cement prices have come down by around Rs 7-10 in the last couple of weeks."

A price revision in the current scenario could be looked upon as a reverse psychology used by cement companies to arrest the sliding prices."

Meanwhile, in other regions around the country prices have witnessed a softening. Industry observers said the downward trend in prices will continue due to slackening demand.