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The price of cement is in a state of free fall in the Andhra Pradesh market.
Retail prices for a bag of 50 kg have plummeted to Rs 230-240, essentially on low demand and too many players in the market, say experts.
The slide began towards the end of July. The prices touched a high of nearly Rs 300 a bag in the city in early July. The prices have then slipped continuously dropping by nearly Rs 50-60 a bag in the last couple of days.
The reduction in prices in neighbouring Maharashtra, Tamil Nadu, Karnataka and Orissa in comparison is moderate. It is between Rs 20 and Rs 25 a bag.
“Andhra Pradesh is a sensitive market. There are several new entrants in the last few months. But the very low demand has fuelled this downward spiral in cement prices,” said S. Sreekanth Reddy, Executive Director, Sagar Cements.
“From October, we expect the prices to firm up and stabilise at a rational point. We also expect construction activity to pick up,” he told Business Line . Will the hike in diesel prices put the brakes on this fall? Industry experts hope so.
With transportation costs set to go up and the power cuts hampering industry, two things will result -- cement majors could be forced to cut production and push up prices.
Scarcity of sand from the beginning of the year and the power holidays (AP had 12 days till recently), have hampered construction activity and were impacting realty projects.
This is resulting in lower offtake of cement and other construction materials, said Prem Kumar, President, AP Real Estate Developers Association.
He said finishing works like plastering cannot be done without sand.
“While it is usual to see slackening of demand during monsoon, increased players and availability of additional capacity have led to a competitive pricing,” said S.V. S. Shetty, Chief Executive Officer, Anjani Portland Cement.
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