Cement prices are expected to rule firm in the coming months due to rising input costs and manufacturing expenses, according to the Centre for Monitoring Indian Economy (CMIE).

“(Cement) prices are likely to remain high in the coming months. The growth is expected to moderate as the base effect sets in. Prices are expected to recover and rise by 6.4 per cent in FY’12, after falling in the previous year,” the think-tank said in its monthly review.

The prices are expected to average 3.8 per cent higher in FY’13, it said.

During the third quarter of FY 2012, power and fuel cost rose 10.7 per cent year-on-year (y-o-y) due to twin effects of higher coal prices (both domestic and imports) and cheaper rupee against the dollar. Freight costs were also higher by 12.5 per cent y-o-y due to increase in diesel costs and surcharge levied by railways.

Cement prices in Mumbai, one of the largest markets, shot up by Rs 42 per 50 kg bag from Rs 248 in January 2011 to Rs 290 in January 2012. The average price of a cement bag was Rs 292 in January 2012, the CMIE said.

Meanwhile, the demand is expected to improve in the coming months and growth in despatches is likely to be modest at around 4 per cent during March 2012 quarter.

Leading cement producer ACC Ltd said its production for February 2012 stood at 2.14 million tonnes per annum against 1.97 mtpa in the corresponding period in 2011. The despatches increased from 2 mt in February 2011 to 2.15 mt last month.

Ambuja Cements’ output shot up from 17.91 lakh tonnes in February 2011 to 19.93 lakh tonnes in February 2012. The despatches rose from 17.74 lakh tonnes in February 2011 to 20 lakh tonnes in February 2012.

Related Topics
comment COMMENT NOW