The Hindu Business Line : Cement stocks surge on price hike reports

Mumbai, July 4 Prices of cement stocks on the BSE rose on Wednesday following reports that cement companies have hiked the prices by Rs 3 to Rs 5 per 50-kg bag across the country; recently the Finance Minister, Mr P. Chidambaram, said that the Government was not controlling cement prices.

Cement major ACC rose nearly 9 per cent to Rs 10,22, Mysore Cement jumped 6.86 per cent to Rs 57, UltraTech Cement was up 6.31 per cent to Rs 940, Andhra Cement moved up 4.55 per cent to Rs 26 and Gujarat Ambuja went up 4.46 to Rs 129.

A Morgan Stanley note to investors has forecast better future for cement companies. “Pricing power appears to have returned for the next six to nine months for cement companies. With inflation easing, the government seems to have relaxed their stance on cement pricing,” said Mr Akshay Soni, analyst with Morgan Stanley.

However, a Gujarat Ambuja Cement spokesperson said “we have not raised prices.”

In the first quarter of financial year 2007-08, cement companies had hiked prices by Rs 3-5 per 50 kg bag in Kerala/Karnataka and Rs 15-20 per 50 kg bag in Andhra Pradesh/Tamil Nadu.

Contrary to the belief that cement prices may come down due to sluggish demand during monsoon, prices have gone up following increased construction activities and economic boom, market men said.

Though the Government had recently eased norms to facilitate imports to check rising domestic prices, an analyst said: “imports may not be possible before September due to the monsoon, which may pave way for further price hikes”.

In a bid to contain the rising prices of cement and increase its availability, the Central Government in April exempted imports of portland cement, barring white cement, from the twin levies of countervailing duty in lieu of excise as also the special additional customs duty of four per cent with immediate effect. Earlier, the Government had fully exempted portland cement from the basic customs duty.