The Hindu Business Line : Cement prices likely to go up on high input costs

Hyderabad, Aug. 15 Cement prices are likely to go up in the next one or two months due to increasing input costs, especially in wages, salaries and coal prices.

“During the last one year (from first quarter last year to the same period this year ), almost all companies incurred about 40 per cent increase in wages and salary costs and this is continuing due to an inflationary effect. This is bound to have an impact on the pricing as this will be passed on to the consumers,” Mr Ramesh Chandro, Managing Director Ckoramaandel Cements Ltd, told Business Line.

In July alone, the southern States had witnessed an increase of Rs 10-15 a bag of cement and the upward trend is likely to continue in the days to come, say industry experts. The price of cement was in the range of Rs 205-235 by the end of first quarter of current fiscal year and in July it had gone up to Rs 215-260.

The industry expects a slackening of demand due to the monsoon and is worried about a further increase in salaries and wages due to inflation .

“This is an issue for the entire industry and has the potential to trigger a hike in prices,” Mr K.C. Jain, Senior President, Kesoram Cements Ltd, said.

Coal PRICE

While the Government had ruled out any further hike in domestic coal prices, the cement industry is likely to be hit by the e-auction of coal by the Government. As of now, 64 per cent of industry’s coal requirement is met by allocation while 34 per cent is being met by the e-auction. “In July alone, we had to pay 100 per cent premium on normal price in the e-auction,” Mr Chandro said.

On the import front, the imported coal was priced at $140 a tonne in the first quarter of the current fiscal year. “Now there are indications that the price would go to $175-190 bracket in the next one month. If it happens, the cost of production will increase,” a senior official of UltraTech Cement said.

However, some feel that the impact of the hike in the imported coal price could only be marginal. “There is a link between the crude oil prices and imported coal price. When the former is actually coming down, it may not be totally wise to expect increase in imported coal prices,” observed Mr Jain.

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