Cement to get dearer as construction gains ground

The hike expected to be effective across the country by mid-January.

Be prepared for the year's first revision in cement prices. As construction activities are gearing up, cement is all set to become dearer in the domestic market. The hike, expected to be around Rs 3-5 a bag (of 50 kg), was expected to be effective across the country by mid-January, said market sources.

Once put in force, this will be the second upward push in less than three months. The last time a revision had taken place was in the first week of November.

In Mumbai, at present, the average price of cement is at around Rs 225 a bag compared with the Rs 175 level in January 2006. This means the price has gone up by 28 per cent in a year ago. "In north, the winter is likely to be less cooler and also the fog will recede by mid-January. The change will put construction activities back on track, pushing the cement demand up. So the prices may just jump," A K Sarogi, chief financial officer, JK Cements, said. Because of a likely tightening situation between production growth and consumption growth, cement prices might scale new peaks this year, he added.

"Probability of a price revision is very high this month," said J Radhakrishnan, a cement analyst with India Infoline. Agreeing with him, Sanjay Ladiwala, president, Cement Stockists and Dealers Association of Bombay, said, "Considering the likelihood of demand being generated in the coming months, market can easily witness a rise of Rs 5 a bag."

With various road projects to be commissioned across the country and the real estate industry witnessing a boom as property rates soaring, 2007 is going to be another profitable year for the cement industry, feel market experts.

The year 2006 saw a jump of around 11 per cent in domestic consumption.

The consumption surged to around 145 million tonne against 130 million tonne in 2005. On the production front, the domestic cement industry "� which has an overall capacity of 160 million tonne "� produced close to 152 million tonne.