Cement companies have managed to pass on the increase in operational costs and register better realisations in the June quarter. This was on the back of improved demand, especially in the eastern region, including West Bengal, Chhattisgarh, Bihar and Jharkhand.
Realisations in the eastern States were the highest due to a sharp rise in prices amid supply constraints. Production in the region was affected by erratic power supply and temporary shutdown of a large grinding unit.
Mr Basanth Patil, Senior Research Analyst, Dalmia Securities, said realisations for cement companies will improve further as there are no major cost increases expected in the near future.
“Even if fuel prices are increased, they will pass it on to customers as demand will improve here-on with five States going in for Assembly elections next year,” he added.
COAL PRICES DROP
Coal prices have dropped to $94 a tonne in the June quarter from $121/tonne in the same period last year. Most companies have made a huge saving even as the rupee depreciated 21 per cent to 54/$ from 44.7/$ in the June quarter last year. Subsequently, landed coal cost was lower by six per cent at Rs 5,065 a tonne (Rs 5,412 a tonne) in the June quarter. Coal prices are down four per cent as compared to the March quarter when it was sold at Rs 5,257 a tonne.
Coal imports account for about 40 per cent of the cement industry’s demand. Major coal importers include UltraTech Cement, Ambuja Cement, Madras Cements, India Cements, Dalmia Bharat Cement and JP Associates.