Real estate developers in Tamil Nadu are worried about increasing cement prices and pointed out that an ‘artificial demand’ is being created by certain manufacturers to justify the price hike. Data provided by the Confederation of Real Estate Developers’ Associations of India (CREDAI) Chennai shows that the price of a bag of cement in Tamil Nadu has increased 36-44% in the last few weeks to ₹340-360 (earlier it was ₹250).
CREDAI has urged the Tamil Nadu government to take immediate measures to reduce the price of cement. “We request the government to look into this issue in the interest of the common consumer and the builders,” said W.S. Habib, president, CREDAI Chennai. According to Mr. Habib and other CREDAI members, currently, there are over 30,000 constructions of various apartments, commercial structures, various houses and others that are under way in Tamil Nadu. And if the prices are not corrected immediately projects worth over ₹10,000 crore could be affected in Tamil Nadu.
Short supply too
There is a short supply of cement too. “Earlier (four months back), if we placed an order for cement the consignments would get delivered within a day or two. But now the wait period is over four days,” said Mehul.H.Doshi, director of Doshi Housing Pvt Ltd.
All India cement prices increased by ₹17 a bag last month. According to brokerage firm Kotak Institutional Equities, the price increase was mostly led by southern and western regions while other regions saw a marginal increase or decline. Prices in the south are now highest among all regions despite lowest regional capacity utilisation. In February, cement prices increased by ₹40 a bag on average to ₹357 a bag in the southern market. Data from the brokerage firms shows that prices increased by ₹35-40 a bag in Kerala, Andhra Pradesh and Tamil Nadu, while prices in Karnataka increased by ₹50 a bag.
Mr. Habib said that there was no rationale behind the cement price hike. “The price of raw materials that are used to manufacture cement including limestone remains the same,” he added.
CREDAI’s analysis shows that the housing and real estate sector is the biggest demand driver of cement, accounting for about 65% of the total consumption in India. The other major consumers of cement include public infrastructure (20%) and industrial development (15%).