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Cement prices crash with monsoon

With the onset of monsoon, cement prices have crashed across the country. While the drop in Mumbai has been moderate at Rs 7 a bag, prices have dropped by Rs 30-40 a bag in Kerala and Tamil Nadu, by Rs 30 in Kolkata and by Rs 25-30 in Punjab and Delhi.

While the monsoon is the primary reason behind the drop in cement prices, excess supply and new distribution strategies have also affected prices in different markets.

The slump is set to hit all cement companies because prices have been on the decline since January. The fall in prices in the January-March quarter saw all cement companies reporting a massive decline in profits. A further fall in prices would have a severe impact on the bottom line, analysts said.

Senior industry sources said cement prices in the south had also been affected by excess supply. However, in east India cement manufacturers are engaged in an internecine war, directly dispatching to bulk customers to bypass the dealers.

Prices in Kerala, Tamil Nadu and Andhra Pradesh have dropped Rs 20-50 per bag to Rs 130, Rs 120 and Rs 95 per bag, respectively. In Bangalore, a three-day dispatch holiday was announced by manufacturers after prices fell by Rs 10 at Rs 130 a bag.

The retail prices in Mumbai stand reduced to Rs 143-145 per bag, while those in Kolkata, the main market in the east, have dropped to Rs 125 per bag. "With low off take, prices may further drop by Rs 10 per bag," a leading Mumbai stockist said.

Meanwhile, the Cement Manufacturers' Association Monitoring Committee met yesterday and decided to refrain from announcing any further price cuts. The meeting was attended by officials from ACC, Larsen & Toubro, Grasim and Gujarat Ambuja.

"The existing price level is very low. From here, it should only look up and not dip any further. This is only the beginning of the monsoon, and it is too early to comment on the price trend that will prevail during the season," says A K Jain, director of marketing at ACC and the official spokesperson of the Cement Manufacturers' Association.

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