Cement prices rise in India

The Confederation of Real Estate Developers’ Associations of India (CREDAI) is considering taking action against the cement industry over recent price hikes. CREDAI claims prices have risen by Rs.60 – 70 per 50 kg bag in the last week and is accusing the industry of cartel-like behaviour. Lalit Kumar Jain, chairman of CREDAI, told press: “Considering that buyer sentiment is low, the cement price rise defies logic, so CREDAI will consider going to the CCI to seek intervention against the cartel of cement manufacturers.”

The cement industry is still dealing with the fallout of the most recent CCI investigation, which resulted in a number of companies being fined for cartel activity. Those allegations are still being appealed by some of the companies involved. The total fine across eleven cement companies and the Cement Manufacturers Association amounted to Rs.6307 crore.

Freight, power and fuel costs have all risen in recent weeks. This would explain the price hikes, which come at a time when demand has not altered significantly. The depreciated rupee has increased the cost of imported coal, while domestic coal prices have also been raised.

Export potential

Meanwhile, in Southern India, where demand is slower than in other parts of the country, cement companies are looking at export markets to improve their horizons. Though bad for fuel prices, the depreciation of the rupee has made exports more profitable, with countries like Sri Lanka, Myanmar and South Africa being considered for their potential. India Cements is hoping to improve capacity utilisation by re-starting export activity, which had fallen away when the rupee’s value was higher. Dalmia Cement exported 80 000 t of cement between January and August this year, more than double its exports in the same period of 2012. A representative from the company told press that the company is hoping to export cement to Myanmar and East Africa, perhaps within this financial year or soon after. Port operator MARG Ltd has seen significant growth over the last 12 months. “Till now the (Karaikal) port has been handling cement in bulk,” said G R K Reddy, chairman and managing director of MARG Ltd. “We are planning to start a container service, which will help companies to send in smaller quantities,” he added.

Written by Katherine Guenioui