Search the Internet          Tips  Sites: Finance, Investment

Cement prices fall in key Indian market

Domestic cement manufacturers have cut prices in the key Indian market of Bombay to revive demand in a market already besieged by a supply overhang, cement dealers said on Thursday.

Prices fell Rs 3-5 per 50-kg bag to Rs 170 in the past week, one dealer said.

An economic daily on Thursday quoted an unnamed industry official as saying domestic demand in April had fallen short of expectations, remaining static at eight million tonnes, the same as a year ago.

Cement producers cut production last November in a bid to drive up prices, which subsequently rose by 35 percent.

The widespread output cuts and price hikes prompted the government to launch an investigation into allegations that major producers had formed a price cartel, a charge denied by the industry.

Another business newspaper said on Thursday smaller cement makers took the lead to cut prices to increase market share.

Cement prices, which usually soften during the monsoons when construction activity is at its lowest, have declined earlier than usual as the major producers were forced to match the price cuts, it said.

Prices are also under pressure from moves by several major producers to expand capacity, adding to existing over-capacity.

Associated Cement Companies started operations at a 2.6 million tonne-capacity plant last month.

Industry leader Larsen & Toubro plans to add a one million tonne per annum unit in Durgapur in eastern India by December.

Gujarat Ambuja Cements is also expected to add two million tonnes of capacity in the western state of Maharashtra by year-end. It is also planning a similar sized plant in southern Andhra Pradesh state by next year.

Grasim Industries said last month it plans to add 3.5 million tonnes to its annual capacity by mid-2002.

These additions will raise the current domestic capacity of 115.6 million tonnes by 7.4 per cent.

Tell us what you think of this report