Cement prices expected to surge soon

NEW DELHI: The rate of 50-kg bag of cement is expected to surge by nearly Rs 9 this month since the new coal pricing mechanism adopted by Coal India has raised the manufacturing cost for the manufacturers of the building material, said Crisil Research in a statement.

Ajay D'Souza, Crisil Research Head, said, “Cement players will try to pass on the cost increase resulting from the new pricing policy adopted by Coal India w.e.f. January 1, 2012. Hence, we believe that pan-India cement price is likely to rise by 2-3 per cent in January, 2012. The improved pace of construction activity would also support demand growth during the month, aiding price rise.”

Moving from its previous practice, CIL commenced pricing coal on the basis of gross calorific value, the energy manufactured by burning it, with effect from January this year. In the past, the coal price has been fixed on the basis of the moisture and ash content present in coal.

The average price of a 50-kg bag of cement declined by 1% in December. In the April-December period of the present fiscal, India's cement consumption rose by 5.9% to 160.3-million tonnes from 151.4-million tonnes in the same period last fiscal.