With newer infrastructure projects coming up in the country, "optimism" will drive the increment in cement prices in line with demand, an expert said on Friday.
"It (price hike) is based mainly on optimism because now it is soon likely to pick up with new projects like the metro rail and other projects coming up, that the prices are being quoted at a higher rate," cement expert Sanjay Ladiwala told BTVi in an interview.
"Obviously, when manufacturers see a potential for rise in growth of demand, they are going to quote it at a higher price," he said.
Ladiwala told BTVi that while the eastern region of the country is quite comfortably placed, a rise in cement prices might be witnessed in the north by November or December.
He added that besides monsoon, there are various roles at play for the price hike as regional dynamics of pricing and the demand-supply situation in all the regions are different.
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"There are so many variables besides just demand and supply of cement. Not only monsoon, but so many political factors, projects that don't come off -- there are so many other factors which affect cement demand, which eventually often boils down to pricing," said Ladiwala.
Ladiwala said the northern region has the highest consumption of cement in absolute volume terms, but it also has the highest installed capacity.
"So the pick-up there in prices is always a little slower because the volumes are so huge that the effect of the increase in demand takes a little longer to set in," he noted.
"Even in the west, the demand has not picked up as such because it's not that demand picks up the next day monsoon comes. But it is based mainly on optimism, because now it is soon likely to pick up with such new projects like the metro rail and others," Ladiwala added.
--IANS
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