Cement prices in India set to rise

(From left) Dharmasri Kumaratunga, Director - Payments and Settlements, Central Bank; Nanda Fernando, Managing Director, Sampath Bank; and Tharaka Ranwala, Head of Operations and Group Chief Marketing Officer, Sampath Bank

NEW DELHI, Jan 19 (Asia Pulse) – The price of a 50-kg bag of cement in India may go up by as much as Rs 9 (US$0.17) this month as the new coal pricing mechanism adopted by Coal India has increased production costs, Crisil Research 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,” said Crisil Research Head Ajay D’Souza.

Deviating from its earlier practice, CIL started pricing coal on the basis of gross calorific value — the energy produced by burning it — with effect from January this year.

Earlier, the price of coal was fixed on the basis of the moisture and ash content present in coal.

The average price of a 50-kg bag of cement fell by 1 per cent in December vis-a-vis November to Rs 285, despite strong 13.4 per cent growth in demand vis-a-vis the corresponding month last year to 20 million tonnes.

“The improved pace of construction activity would also support demand growth during the month, aiding price rise,” D’Souza added.

During the April-December period of the current fiscal, the country’s cement consumption grew b