Cement has turned costlier by about Rs 25 a bag for buyers in south India due to the ongoing agitation in Andhra Pradesh for a separate State of Telangana.
Cement is sold at Rs 280-Rs 310 a bag compared to Rs 265-Rs 285 a month ago, according to industry sources.
The increase in price has been mainly driven by acute shortage of coal for cement companies in Andhra Pradesh, which cater to demand in key southern markets apart from AP.
“As coal supply has been hit due to the general strike in Singareni, the industry is forced to import coal — which is 30 per cent costlier — for clinker production,” Mr S.V.S. Shetty, Chief Executive Officer, Anjani Portland Cement Ltd, told
“The price may go up further if the situation continues,” he added.
Coal is used as a source of energy in cement production. Its price is an important factor as it generally accounts for 35-39 per cent of cement prices.
Cascading effect
A senior executive of UltraTech Cement, who did not want to be identified, said the disruption of distribution channels in the Telangana region had a cascading impact on all southern markets.
“The demand was picking up in August. But now, the price hike and problems in distribution led to decrease in consumption during September,” he said.
According to industry data, cement demand in the south was at 23 million tonnes in August 2011.