• FEBRUARY 4, 2000

Cement prices surge in western India

According to newspaper reports, cement prices in Bombay and rest of Maharashtra have surged on the back of a boom in construction activity. In Bombay alone, prices have increased by Rs 17 per bag in the last one-month.

The price scenario for the rest of India however remains grim. The northern and eastern markets did not record any increase in prices while the southern markets (some parts) actually recorded a decline. The recovery cement continues to be mixed.

The northern and eastern markets have also suffered from excessive price competition that was unleashed by Lafarge, which had recently bought the cement plants owned by Tata Steel. Southern markets too have been facing an increase in competition (increased supply). This time it is the port based cement plants (like Gujarat Ambuja) that have been targeting the southern states. The western markets on the other hand have benefited from a rise in construction activity.

The overall scenario for the cement sector however looks positive in view of the pick up in economic activity. With large infrastructure spending planned in the coming years and the likelihood of a pick up in private sector investment activity, the cement sector can look forward better times. Not to forget, there will only be limited addition to cement capacity till FY01. This will further benefit the sector (higher realisations) as the demand supply gap narrows.

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