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Suresh P. Iyengar

Mumbai, Sept. 6 Market perceptions that cement imports from Pakistan might not come cheap (as reported by Business Line on August 29) appear to have boosted cement companies’ shares on the bourses on Thursday.

A strong demand even during the monsoon, when construction activities slow down, raised hopes of a price hike.

On Thursday, India Cements stock jumped 4.31 per cent to Rs 274, Madras Cements - 2.68 per cent to Rs 3,800, ACC - 1.83 per cent to Rs 1,102, Sagar Cement - 3.54 per cent to Rs 154, Ambuja Cements - 2.29 per cent to Rs 141 and Binani Cement by 2.24 per cent to Rs 70.

Over the week, India Cements gained 13.78 per cent to Rs 274, Sagar Cements – 13.51 per cent to Rs 153, Shree Cements – 10.12 per cent to Rs 1,351, UltraTech – 8.15 per cent to Rs 1,000, Madras Cements – 6.76 per cent to Rs 3,800 and Binani Cement - 6.22 per cent to Rs 70.

Prices in Pakistan too have risen of late by Rs 20-215 per 50 kg bag, making exports unattractive there.

Imports from China, Bangladesh and Sri Lanka have been ruled out on quality concerns.

Pakistan cement companies are quoting (free on board) around $85-90 per tonne (Rs 3,485-3,690), which is dependent on the order quantity. Average cement prices in India are around Rs 4,800 per tonne.

Imports become less attractive once handling, transportation and storage costs are added, said a dealer.

“Domestic cement companies have already sent out signals that prices might go up mid-September. Coal prices have gone up substantially due to supply crunch. With strong demand, companies would obviously pass on any increase in input cost to the customers,” said an analyst.

Industry experts also maintained that since January only 7-8 million tonnes of additional capacity had come up in the country. This was not sufficient to meet the increasing demand.

Cement demand in fiscal year 2008 is expected to touch 180 million tonnes. However, the overall industry capacity is only 174 million tonnes, including recent capacity additions as 7-8 million tonnes have been added since January.

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