Cement prices likely to spurt across south India

Threat of nationwide transporters' strike from Aug 21 to push prices by Rs 10-15/bag.

Cement prices are likely to go up by between Rs 10 and Rs 15 across south India because of the threat of a nationwide transporters' strike from August 21. The end of the monsoon season is also being cited as another reason.

At present, cement prices are hovering between Rs 132 and Rs 145 per bag in Andhra Pradesh, between Rs 160 and Rs 170 in Tamil Nadu, between Rs 160 and Rs 170 in Karnataka and between Rs 167 and Rs 170 in Kerala.

In the case of AP, the start of the Krishna pushkarams (festivals) on August 28, when labour is hard to get and also construction activity comes down, is cited as another incentive for manufacturers to raise prices.

The combination of the transporters' strike and the pushkarams will negate the onset of the marriage and construction season (Sravan) from August 17 to September 16.

The All-India Motor Transport Congress has called for a nationwide lorry strike from August 21.

According to the industry observers here, the transporters are likely to go ahead with their strike as the central government may not accept all the demands like reduction in diesel prices, removal of toll gate charges and reduction in road tax etc.

The transporters may not compromise on any of their demands and the strike is imminent, they said.

The renewal of orders for cement by the Andhra Pradesh Housing Corporation though is also expected to help sustain demand for cement, industry observers said here.

It may be recalled that for the first time in the history of Andhra Pradesh, the Congress government led by YS Rajasekhara Reddy is taking up construction of 9.5 lakh houses, including 3.5 lakh promised by the previous TDP government, for weaker sections by March 2005. This is expected to have a positive impact on cement offtake.

The state cabinet sub-committee which met on Thursday also recommended that the unit cost for housing be increased from the earlier Rs 22,500 to Rs 25,000 in rural areas and from Rs 30,000 to Rs 40,000 in urban areas.

The state government also recently announced that MLAs would be given Rs 1 crore each to take up development activities in their respective constituencies.

All these factors would see a surge in the demand for cement in the coming months, fuelling speculation activity in the state, the observers pointed out.

Every monsoon since 1999 has seen a slide in cement prices and rule in the range of Rs 80-100. This year, however, the price fall has not taken place because of the concerted efforts by the industry.