India: Cement prices set to rise in western, southern regions

After increasing prices in November, Indian cement manufacturers seem set to effect another round of hike soon in western and southern regions due to shortage of wagons, analysts said.

"In November 2009, cement prices went up in the western and southern regions by Rs 5-8 per bag of 50 kg due to shortage of railway wagons. Cement prices in these regions are again set to increase by Rs 5 per bag in a week's time as the logistic problems continue," broking firm Sharekhan Head of Research, Gaurav Dua told PTI.

Some dealers also observed that owing to logistical problems, prices in Mumbai and other major cities of Maharashtra are set to high by Rs 5 per bag this week. Average price of cement in Mumbai is Rs 240, which is likely to reach Rs 245-248 per bag in a week's time.

In Gujarat, the prices of cement in major cities like Ahmedabad, Baroda, Bharuch, Mehsana and Surat went up by Rs five each bag with effect from December 15 and cement sells there in the range of Rs 200-205.

In Hyderabad, cement prices touched a low of Rs 130/bag in November but is now quoting at Rs 140-145 per bag, is expected to reach Rs 150 per bag in a week's time.

The price rise has come as a positive surprise for the domestic cement industry, "we believe the hike in cement prices is a temporary phenomenon and is unlikely to sustain once again railway wagons are available", Dua said.

Meanwhile, cement dispatches in November grew to 12.47-million tonnes (MT), showing an increase of 10.9 per cent year on year (YoY) due to rise in infrastructure activity.

On a sequential basis, the dispatches improved by 2 per cent compared to October figures.

During the month under review, the eastern region continued to witness the highest volume growth of 17.5 per cent. The central and western regions also posted an impressive dispatch growth of 16.6 per cent and 12.6 per cent, respectively, he said. The southern region continued to register a poor performance with a volume growth of 5.8 per cent, he said.

India Cements emerged as a front runner with volumes growing by 25.6 per cent (YoY) to 0.8 MT in November. Grasim Industries and Madras Cement also registered an impressive volume growth of 17.3 per cent and 18.1 per cent on (YoY), respectively.

On the other hand, Orient Paper & Industries (Orient), whose dispatches had declined in the previous four-months has reported a strong volume growth of 10.8 per cent for the month. But some of the top cement makers posted a mixed performance in volume growth for the month, Dua said.

From China Cement (2009-12-21)