The Hindu Business Line : Cement prices set for a hike in the new year

“A price increase appears be imminent as the coal and freight charges are set to go up very soon. Coal India has already indicated a 5 per cent hike and rest of the coal suppliers are likely to do the same,” Mr Srikant Reddy, General-Secretary, All-India Mini Cement Manufactures’ Association (AIMCMA), told Business Line here.

Price hike

Currently, the price of a cement bag is hovering around Rs 215 to Rs 235 across the country.

Although there has been no clarity yet on the quantum of hike in input prices, it would surely be passed on to the consumer, Mr Reddy said, adding, “Our feeling is that the cement price hike may be in the range of Rs 5 to 8 across the country.”

According to Mr Ramesh Chandro, Managing Director of Coramandel Cements Ltd, price hike would be necessitated by the unabated gulf between demand and supply.

“Any price hike will have to factor in the increase in input costs and growing demand. Current year had witnessed about 10.75 per cent growth in demand while the expected capacity addition no where in sight,” Mr Chandro said.

More activity

The industry is also expecting that the demand growth would cross the 1999-2000 record of 15 per cent next year. “There could be more construction activity as the next year would be the second year of the XI Plan. Further, the proximity to elections in 2009 will mean more focus on irrigation and housing,” he felt.

Initially, the industry expected that about 20 million tonnes of new capacity would be added during 2007-08.

“However, there is no clarity as of now on the capacity augmentation till now. Only five to six mt could have been added till now,” he said.