Cement prices rise steeply, despite lower operating rates: CRISIL Research

By Accommodation Times (www.accommodationtimes.com)

Lower demand for residential real estate and slower pace of execution of infrastructure projects weighed down demand for cement in the April 2011 to January 2012 period. Demand for cement grew at a subdued pace of 6.3 per cent y-o-y. With huge capacity additions during the same period, operating rates declined to 73 per cent as compared to 77 per cent in the previous year. Despite this fall in operating rates, cement prices rose by 15 per cent y-o-y. This was mainly due to production cuts by cement manufacturers in the South, the region which witnessed the maximum price increase.
In January 2012, the average pan-India retail cement price marginally corrected by around 1 per cent on a month-on-month basis to Rs 283 per bag.
“We believe that the pan-India cement price is likely to remain firm in February 2012, despite the rollback of the hike in coal price by Coal India,” said Ajay D’Souza, Head, CRISIL Research.

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