See volatile cement prices in near future: Sanjay Ladiwala

Cement prices have risen primarily in the South and the West India, says Sanjay Ladiwala, Cement Stockists and Dealers Association of Mumbai. This has been on the basis of a slight pickup in demand plays, more on optimism than anything else, he says. There will be a lot of volatility in prices, he says. There is optimism that prices would go up but at the same time when newer capacities come in, there will be pressure on prices and correction will happen, he adds. This volatility is likely to continue for the next six months.

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Anand Jhunjhunwala, Proprietor, Anand Enterprises, says in the east prices had corrected by nearly Rs 80/bag from the peak levels during monsoon in the last 3-4 months. But he expects prices to go up now during the festive season.

But Rajiv M, MD, Kayoma TPL, CPL, says there has already been two price hikes totaling to about Rs 60, which is quite a bit and now cement manufacturers are fairly comfortable.

Below is the verbatim transcript of Sanjay Ladiwala, Anand Jhunjhunwala and Rajiv M's interview on CNBC-TV18

Q: There is some suggestion from dealers that prices have been hiked across key regions. Have you noticed any price hikes and this has come despite the demand being quite muted? So what is your assessment of the situation both in terms of prices as well as demand?

Ladiwala: Yes, prices have been rising mainly in the south and west, east has been quite steady. This has been on the basis of a slight pickup in demand plays, more on optimism than anything else because there is little ray of hope that the demand has picked up. And based on this, prices have been enhanced. It is like a me too situation where one company enhances the prices and others follow. And it is mainly based on optimism so one wonders whether these will really sustain in the long-term.

Q: Will you agree with that, could you raise prices in the east, was it because of demand pull or is it that you were just adjusting to the rains and you are coming back to summer levels?

Jhunjhunwala: Actually rainy season is over in this part of the country and from the peak levels the prices have gone down by approximately Rs 80 in last three-four months. And we are expecting that post festive season the prices should go up and Ultratech Cement who is the market leader as far as pricing is concerned and volumes are concerned, they have to take control of it. Post festive season prices should go up.

Q: Are you saying you all have not raised at all post monsoon?

Jhunjhunwala: No, in the last 15-20 days, manufacturers have increased prices. First price hike was on September 3 that was of Rs 10 and another announcement was there for another Rs 10 but they have been able to implement Rs 20 in the market.

Q: Now with the Ultratech Cement-JP Associates deal there are estimates that the market share could rise quite a bit to above 35 percent etc. Since you track the central region as well what is the sense you are getting about how the market share situation will pan out?

Rajiv M: Ultratech will maintain its market share, may be even go up a little bit but otherwise everybody should maintain their share equally.

Q: What about the price hikes then, are you expecting more price hikes?

Rajiv M: There has already been two price hikes totaling to about Rs 60 so that is quite a bit and now the cement manufacturers are fairly comfortable. Otherwise prices were low considering the kind of money they invest into infrastructure - all costs have gone up. Now at least the prices have come to acceptable levels.

Q: How are you looking at demand in general in the next three months in this festive quarter? Will that bridge the utilization, will it come up to supplies at all?

Ladiwala: No the utilization levels will not go up very substantially, I am talking on a pan India basis baring the east because east volumes are very low, the market base itself is very low and there are very few players. So baring the east for the other regions the utilization levels are going to hover around 70-75 percent in the coming three months. During the peak season yes we expect those utilization levels to go up, there is new capacity coming on stream also which is going to add to the pressure on the prices.

So we will see a lot of volatility in prices. Of course there is optimism that the prices would go up but at the same time when newer capacities come In and there is pressure on prices, we are going to see corrections happening. And this volatility will be the feature for the next six months.