Cement prices are expected to rise by 5.9% in FY13

"With costs expected to continue to rise, cement prices are likely to increase in tandem and remain on the higher side. We believe prices are expected to rise by 5.9% during FY13," Centre for Monitoring Indian Economy (CMIE) said in its monthly review here.

The average cement prices ruled Rs 259 per 50 kg bag in FY11. The price started moving up from Rs 283 per bag in April 2011 to 312 in March 2012 and Rs 323 in April 2012.

Prices in most of the cities rose by 3-6% during the month. The rise in prices can be attributed to the increase in railway freight charges announced in March and excise duty hike announced in the Union Budget 2012-13.

The demand for cement remained muted during the April-October 2011 period. However, the demand picked up in the second-half of the year and led to a 10-11% increase in dispatches.

Thus, sales volumes rose to 2,233.5 lakh tonnes for FY12, 7% higher than the previous year. The FY12 also saw recovery in cement prices, CMIE said.
CMIE expects cement dispatches to remain healthy in the coming months. An expected improvement in demand coupled low-base is likely to aid the growth. For the FY13, dispatches are expected to rise by 7.5%, it said.