Cement prices likely to rule firm: CMIE survey

Cement prices likely to rule firm: CMIE survey

Mumbai: Cement prices are expected to maintain their northward movement in the backdrop of the continuing boom in the construction sector and rising cost pressures.

“Cement prices remained firm across major cities, backed by a strong demand from the construction sector. Given the strong demand and also that companies were facing rising cost pressures, cement prices are expected to continue their upswing post-monsoon, the Centre for Monitoring Indian Economy’s (CMIE) capex survey said.

Mumbai and Delhi witnessed a price hike of Rs3-5 per 50 kg bag.

Prices in the Mumbai market peak to Rs242 per 50 kg bag in July and stood at Rs239 in September. The rates in September 2006 were at Rs215 per 50 kg bag.

The uptrend in cement prices was more salient in Southern India, with Chennai and Hyderabad reporting a rise of around 6.5% each. The hike was much sharper in Bangalore at around 19%, CMIE said.

Cement consumption continued to rise even during the slack monsoon period. It posted a double digit growth of 14.5% and 18.6% in July and August respectively.

Cumulative consumption grew a healthy 10.8% during April-August 2007. During this period, the western zone posted the fastest consumption growth of 20%, it said.

Cement production regained momentum after a slow start in the first quarter of this fiscal. The same grew a healthy 9.7% in July followed by a 17% rise in August.

Aggregate production during April-August 2007 grew by 9.1%, over and above the 10% rise recorded in the year-ago period, the CMIE report said.

The CMIE data revealed that the cement production peaked at 149.93 lakh tonnes and consumption at 146.50 lakh tonnes in March 2007. Production stood at 136.57 lakh tonnes, 133.65 lakh tonnes and 128.40 lakh tones in June, July and August respectively.

The total cement production stood higher at 680.91 lakh tonnes in April-August as compared to 624.22 lakh in the corresponding period last year. Similarly, consumption rose from 588.28 lakh tonnes to 660.30 lakh tonnes in the April-August period.

Meanwhile, real estate growth may lead to increase in investment momentum in the cement sector with existing players gearing up for major expansions.

“Investment momentum in the cement sector continued with companies gearing up for expansions. The total outstanding investments in the cement sector touched a peak of Rs71,127 crore as of September 2007," CMIE said.