The Hindu Business Line : Cement prices may remain stable

Mumbai, July 17 Cement prices may remain stable belying the general expectations of a sharp fall starting July when the monsoon intensifies. Prices have gone up by Rs 8-10 for a 50-kg bag in the northern region on the back of strong demand and hike in diesel prices.

Mr Vinod Juneja, Managing Director, Binani Cement, said the Rajasthan Government has raised local taxes from 12 per cent to 14.5 per cent, pushing up the cost by Rs 3 a bag.

“We have not seen any drop in demand in the western and northern region so far as the monsoon was delayed. Moreover, the hike in diesel prices have increased cost further,” he added.

Capacity utilisation

Supply may drop marginally in the next two months as many companies in the northern region, which includes Rajasthan, Delhi, Punjab, Haryana, Himachal Pradesh and Uttarakhand, undertake annual maintenance work in July and August. Capacity utilisation may fall to 85 per cent from 90 per cent, said Mr Juneja. With demand remaining buoyant thanks to the Government’s infrastructure spending and cut in production due to annual maintenance work, prices may “more or less” remain stable, added an analyst.

Cement prices fell in March following a two per cent cut in the excise duty but began moving up from April. The average price across the country is around Rs 250 a 50-kg bag. In Kolkata, it is about Rs 272 and in the northern region Rs 235. This part of the country also gets supplies from Pakistan that make up 5-7 per cent of the demand. Pakistani cement costs Rs 145-150 a bag but gets inflated to around Rs 190 by the transportation cost of Rs 40-45 a bag to Amritsar or Delhi from the Wagah border. This is far below the average price of Rs 245-260 a bag in the North. Cement prices are about Rs 250 a bag in the Mumbai region.

The Budget allocated Rs 3,973 crore for housing and providing basic amenities to the urban poor with the goal of making the country ‘slum-free’ in the next five years.

The allocation for the Indira Awas Yojana has been increased 63 per cent to Rs 8,800 crore, while Rs 2,000 crore has been allotted to the Rural Housing Fund. The National Housing Board has been allocated Rs 2,000 crore. All this could translate into more business for the cement industry.