Soaps may cost more as palm oil prices surge

A further 28 per cent rise in palm oil prices is likely to trigger another round of price hikes in toilet soaps. Both Hindustan Lever (HLL) and Godrej Consumer, the top two players in the segment, have hiked product prices in the last few quarters.

Nirma too has increased the prices of its soap brand, Nima, by Re 1 in the current quarter.

Palm oil comprises about 25 per cent of the total input costs in toilet soaps. Hoshedar Press, executive director and president, Godrej Consumer, said the company would review its prices by the end of the fourth quarter.

"Input costs have been rising and we have increased product prices by 6-8 per cent last month. If the trend continues, we will take a call of further price hikes around April- May," said Press.

Dorab Mistry, director, Godrej International, said Malaysian palm oil prices are expected to trade between $ 466 and $ 509 per metric tonne in the first quarter of 2007.

The price hike is seen as the result of shrinking stockpiles as the demand for palm oil as an alternative fuel and as cooking oils increase.

China and India are said to be the biggest consumers of this oil and there is increasing demand for the commodity in both countries. Already, palm oil prices have risen close to 30 per cent over the past year, leading manufacturers to pass on these costs to the consumers.

An HLL spokesperson said the input cost increase component had always been present, but it hadn't necessarily resulted in price hikes. In October, HLL increased the price of the 100 gm Lux bar by 7.7 per cent from Rs 13 to 14 and the 150 gm by 5.3 per cent (Rs19-20).

Earlier in the year, it had also increased the price of its popular soap brand Lifebuoy.