INDIA: Cement firms offer discounts to meet sales target

The sharp rally seen in cement prices, post monsoon, has been arrested. This is being attributed to the discounts offered by top companies to reach sales target.

Prices of the building material touched an all-time high of Rs 280 for a 50-kg bag, in November. However, during this month the average price then declined to Rs 270 a bag.

Cement makers and industry analysts term it a normal phenomenon, and add that by January-end, prices are likely to rise again. According to analysts, the strategy of offering discounts is being adopted to push sales.

“Prices in Kolkata have slipped to Rs 300-310 per bag, from Rs 330 a month before,” said Hrriday Goswami, a stockist. Adding: “This is the month when cement companies, with a January-December accounting period, focus on meeting sales target rather than maintaining prices.

“ACC, Ambuja and Lafarge are selling cement in the wholesale market at Rs 295, while UltraTech is selling at about Rs 10 less than other players,” Goswami added.

The northern and eastern markets have taken a price cut of around Rs 20. In Delhi, cement is available at Rs 250, against Rs 270 a bag last month. In the East, prices are hovering around Rs 300 a bag, compared to Rs 320 in the previous month.

H M Bangur, managing director of north major, Shree Cement, said, “Prices have eased a little by Rs 10-15 per bag and are likely to stabilise in January. But we expect prices would move up from February-March.” A Mumbai-based research head agreed, “I do not think prices would correct further. I understand that by as early as mid-January the prices would rally again.”

Industry officials attributed the downward movement in price, to weak demand due to very cold weather. One of the dealers in Mumbai said, “Though prices in the western region managed to sustain, incremental supply from the northern market has gone up.”

Cement prices in Mumbai, have remained consistent at Rs 276 per bag for wholesale buyers and retail prices have increased to Rs 280-282 per bag. In Gujarat, cement is selling at Rs 255 per 50-kg bag.

In the South, Chennai is feeling the pressure, as prices are expected to come down from the present Rs 290 in the wholesale segment. In Hyderabad, prices remained unchanged at Rs 275-280 per 50-kg bag.