Sector watch: Where are cement prices headed?

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Sector watch: Where are cement prices headed?

Cement prices are on the rise again, especially in regions in north India. In an interview with CNBC-TV18, Sanjay Ladiwala, President of Cement Stockists & Dealers Associcaiton and Yashwant Mishra, Senior Joint President & Marketing Head of Mangalam Cement gave their perspective on cement prices and the road ahead.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS North India sees surge in cement demand; prices may rise Cement prices in UP to be hiked by Rs 15/bag: Sources To up capacity to 30 mt by 2010-end: ACC ALSO READ See latest News about Mangalam Cement See previous management interviews See what other Experts & Brokerages are saying about Mangalam Cement Mangalam Cement BSE | NSE 08/02/12 Are Mutual Funds betting on Mangalam Cement?

Cement prices are on the rise again, especially in regions in north India. Experts say prices may soon hit levels seen in the first half of financial year 2010. Demand for cement is rising, and pulling cement prices higher in the bargain, especially in north India. Experts blame a demand-supply mismatch for this rise in prices.

Mangalam Cement, a subsidiary of BK Birla Group, has exposure to Haryana, MP, Rajasthan, UP and Delhi. The company recently commissioned 7 lk tonne facility at Kota. It is going to set up 5 wind mills with 7.5 MW capacity.

Yashwant Mishra, Senior Jt President & Marketing Head, Mangalam Cement  told CNBC-TV18 that cement prices hiked in North India, but a cut in prices is seen in South India. North India continues to see good demand and prices have been upped. Demand is strong in Delhi, Rajasthan. The company hiked price in Rajasthan, Delhi and Punjab by around Rs 5/bag.

He further said that wagon unavailability, shortage of supply are leading to a price uptick. "Cement prices are nowhere close to Rs 300 per bag except North-east. In North India, average prices are at Rs 250/bag. Prices in North-east are at Rs 300 per bag in some pockets." He expects an uptick in prices for the next three months. Price gap between South, North is large. Average prices in South India are at Rs 160 per bag, he added.

Sanjay Ladiwala, President, Cement Stockists & Dealers Association of Mumbai said, cement prices are up by Rs 15-18 per bag in North India in the past 1 month. He is expecting a further hike in prices in North India. Prices are seen going up by Rs 5 per bag in North India. Cement prices in North are driven by demand uptick due to uptick in construction, Commonwealth Games, he added.

All India cement despatches stood up 12.4% (YoY). North, Central India despatch growth surprised on upside. South India despatch growth was boosted by re-stocking demand & low base.

Dip in utilisation continues. A sharp increase in capacities is seen. Prices were up Rs 10-60/bag in past month across regions. Sharpest hikes were seen in Lucknow, Patna.

South India prices continue to be under pressure. North India demand continues to be robust and prices are up Rs 10-15 per bag. There is strong demand in Central India and prices spike to Rs 300 per bag. In East India, strong infra demand boosted the prices. In South India, fear of supply outstripping demand looms large. In West India, housing demand has improved and the cement prices stood up by Rs 5-10 per bag.

Are those sustainable increases in prices, how much they can boost realizations?

In an interview with CNBC-TV18, Sanjay Ladiwala, President, Cement Stockists & Dealers Association and Yashwant Mishra, Senior Joint President & Marketing Head, Mangalam Cement gave their perspective on cement prices and the road ahead.

For a verbatim transcript of the interview click on next page. Also watch the accompanying video.