Cement companies in the south have decided to effect a drastic cut in despatches in a bid to increase prices. They propose to increase prices by Rs 10 per 50 kg bag every 10 days for the next one month through strict monitoring of despatches.
The cement majors, after hiking the price in Chennai by Rs 20 per bag over the last 20 days, have now zeroed in on the Andhra Pradesh market. They decided on a two-day freeze on flow of cement supplies to dealers from Thursday, obviously to dry up available stocks in the market.
These companies had already implemented a three-day despatch holiday from September 14 to 16 in Andhra Pradesh, followed by a price hike of Rs 20 per bag at a stretch.
As a result, despatches by all the companies in the Andhra market are expected to come down to 5.5 lakh tonne during September against the earlier estimate of 6.5 lakh tonne. Despatches into state market during August were of 6.72 lakh tonne.
"Our aim is to take the cement prices to Rs 150-160 in Hyderabad, Rs 170-175 in Chennai and Bangalore, and Rs 180-190 in Kerala by the end of the next month from Rs 125 in Hyderabad and Rs 145-150 in other markets," a cement industry source said.
"Andhra Pradesh and Tamil Nadu markets are crucial in the south. If we succeed in increasing the price in these two states, prices will automatically go up in other two markets-- Karnataka and Kerala," the source said.
Cement players in the south had a meeting in Hyderabad on September 15 to chalk out a strategy for the price hike after witnessing a steep fall in the prices in the last two months. The effort was first initiated in Chennai on September 12 when a top representative of the Cement Manufacturers Association (CMA), an apex body of cement producers in the country, flew from Mumbai to thrash out differences among the three major players.
Due to unregulated supplies into market and lack of demand, cement prices in Chennai and Hyderabad fell sharply since mid-July to touch Rs 125 and 95 per bag at dealer end in the first week of September. This resulted in a serious reaction by some cement majors to bring back prices to the higher level.
