Analysts feel limited possibility for cement price rise

Analysts and industry watchers see limited possibility for the cement prices to rise in the coming months because of slowdown in new construction and the crackdown on cartelisation. It may be recalled that Competition Commission of India (CCI) penalized 11 companies at least Rs 6,000 crore, accusing them of cartelization last year. Even as cement companies challenge the penalty order, CCI is expected to take it closer to resolution. Cement demand has been inexplicably weak and that has also weighed on pricing power, some analysts said. Some industry watchers feel that prices are being guided more by the slowdown in the economy and seasonal factors, and the fine did not play a role in the volatility. Analysts expect prices to rise if the Reserve Bank of India cuts its key policy rate early 2013 as that may spur demand for new homes and offices. India is the world’s second largest cement producer after China and is set to consume 223.8 million tonne (mn t) of the material this calendar year, according to Kotak Securities.