The Hindu Business Line : Fall in cement output helps companies hold prices

Mumbai, Sept. 18 The sharp fall in cement production in August seems to have helped companies hold the prices despite the slump in demand in select pockets.

Production in August was down 10.23 per cent at 13.16 million tonnes against 14.66 million tonnes in July as capacity utilisation dropped to 77 per cent against 87 per cent in July, while it was 88 per cent in August 2007.

Incidentally, cement production at Aditya Birla Group companies — Grasim Industries and UltraTech Cement — was down 8.87 per cent at 2.12 million tonnes (mt) in August while dispatches dipped 5.39 per cent to 2.19 mt compared to the same period last year.

Similarly, ACC has reported a 5 per cent fall in production at 1.52 mt in August against 1.60 mt in the same period last year.

Dispatches dropped 1.91 per cent at 1.54 mt (1.57 mt).

Between April and August, cement production in Gujarat was down 5 per cent as compared to the same period last year.

In Punjab and Himachal Pradesh, it dropped by 12 per cent and 13 per cent, respectively, while in West Bengal it was down by 9 per cent, according to Cement Manufacturers’ Association data.

In the western region, which includes Gujarat and Maharashtra, production was down 2 per cent, while the southern region, including Andhra Pradesh, Tamil Nadu and Karnataka, registered a growth of 11 per cent.

“The prices in Chennai were up Rs 13 for a 50 kg bag to Rs 276. In the southern region, Tamil Nadu registered the lowest growth in production at 7 per cent compared to Andhra Pradesh 14 per cent and Karnataka 12 per cent. Moreover, demand in southern States was good,” said an analyst.

In Kolkata, prices increased by Re 1 at Rs 252 per 50 kg, while it remained unchanged at Rs 253 in Mumbai, he added.

According to the latest report of the Centre for Monitoring Indian Economy (CMIE), cement companies have been able to pass on the cost burden in the southern region, in view of the continued buoyancy in cement consumption.

Eastern region

Production in the eastern region — Meghalaya, Uttar Pradesh, Bihar, Madhya Pradesh, Jharkhand, Orissa and West Bengal — was up 4 per cent.

However, the full impact of capacity additions made at the end of last fiscal will come into force in the next few months, thereby capping future price rise.