Cement prices firming up on strong demand

Retail rates in Mumbai pegged at Rs 230-235 a bag.

Cement prices are once again displaying signs of firmness in several cities. This time, strong demand in the pre-monsoon period "" rather than rising freight costs for manufacturers "" appears to be the primary driving factor for higher cement prices.

Retail cement prices in the city are currently pegged at Rs 230-235 a bag, analysts said. This indicates an increase of about Rs 8-10 a bag over the past 15-18 days. On similar lines, in Delhi, cement is currently quoting at Rs 205-210 a bag against the Rs 200 a bag levels a fortnight earlier.

Earlier, the top four cement players reported a robust performance, with their despatches growing 16.15 per cent y-o-y to 51.41 lakh tonne in February 2006.

However, prices in the southern markets like Chennai and Hyderabad have remained more or less flat over the past two-three weeks and that's despite a strong trend in demand. Prices in Chennai are currently hovering around Rs 160 a bag levels.

Analysts highlight that due to the forthcoming assembly elections in Tamil Nadu and Kerala, several large cement manufacturers have adopted a cautious approach towards price hikes. Cement despatches in the southern markets grew 22 per cent y-o-y in February 2006.

Prior to the current rise in prices, cement prices also moved up in mid-February. At that time, cement manufacturers were grappling with a Rs 8-10 rise in per-bag freight costs, on the back of a Supreme Court ruling that banned overloading of trucks.