Cement prices, which have been tracing an upward curve in the last three months, are likely to nudge up further, given the current trends in domestic demand and input costs.
“Cement consumption usually goes up during the November to June period, as also cement prices. Going by current trends, there could be a further increase in prices from the present levels,” Anil Kumar Pillai, Director and CEO, JSW Cement, said.
Cement prices have increased between ₹20 and ₹40 a bag in the last four months, with the prices currently ranging from ₹300 to ₹350 a bag.
Prices softened during the lean season of July to October last year.
“So what’s happening now is that the prices are recovering from that fall,” he told reporters during a visit to the company’s Nandyal unit in Andhra Pradesh.
JSW’s Portland slag cement is priced at about 5-10 per cent lower than the A-grade Portland pozzolana cement in the market.
Asked about the common allegation of the construction industry that cement makers dictate prices through cartelisation, Pillai said the current market situation is that there is lot of idle capacity.
“In a surplus market, there is no scope for any kind of cartelisation. As a cement maker, why should I be dictated by others regarding my prices? There were so many instances when we did not revise prices, when others raised them,” he said.
JSW’s Nandyal unit, which has a capacity of 3 million tonnes (mt) of Portland slag cement, is currently operating at about 50 per cent capacity due to tepid market conditions.
In fact, the cement industry in the southern States and Maharashtra, where JSW Cement is present, is operating at 50-55 per cent of the total installed capacity of about 190 mt.
India Ratings, in its latest report, has pointed out that the southern region, with a significant oversupply, is likely to maintain a supply discipline, with a capacity addition of just 7 mt last year and this fiscal.
This is expected to improve cement capacity utilisation in this region to 61- 63 per cent in the current fiscal.
Infra pushPillai expects that the Narendra Modi Government’s push for infrastructure development would firm up cement demand in the coming months.
Cement makers are hoping that the ensuing Union Budget gives a special thrust on low-cost housing, which again could push up demand.
Plans to lay concrete four-lane roads are also expected to shore up demand—1 km of cement road requires 2,000 tonnes of the building material.
JSW currently produces about 6 mt of Portland slag cement through its units at Nandyal, Vidyanagar in Karnataka and Dolvi in Maharashtra, which is being transferred from group company JSW Steel to JSW Cement.