Rural demand revives cement sales in Dec

12 Jan 2011 Evaluate

Cement sales seem to have revived across regions in December after a lull in the preceding two months. The pick-up in cement demand was attributed to revival of infrastructure and real estate projects, especially in rural areas. The sales would have been much better if not for untoward developments in Rajasthan, one of the major cement manufacturing hubs. The southern markets remained week despite revival in demand from real estate sector due to excess supply.

With the revival in demand cement manufacturers are exploring the possibility of passing on the rise in input cost to end consumers. Cement companies have been reeling under sharp spike in fuel and power cost during the last few months. For instance, coal price has risen to $225 a tonne in the December quarter compared to $210 a tonne in the September quarter. The industry is experiencing acute shortage of coal. Currently only 50-55 per cent of the coal requirement of the industry is supplied through linkage. The balance is procured from open market or imported. Use of alternative fuel pet coke at considerably higher cost than linked coal adds to the cost of manufacturing.

Most companies plan to hike prices by Rs 5-10 for a 50 kg bag in two tranches in January. To start with, the western region including Mumbai and Maharashtra has witnessed an increase of Rs 8 a bag. A similar or moderate hike will be implemented in the northern and southern markers soon. Cement prices in the retail market currently in Mumbai average at Rs 257 a bag, Delhi Rs 210 a bag, Chennai Rs 250 a bag and Kolkata Rs 240 a bag.

Sales Trend