Cement companies form cartel to inflate prices

Source: The Hitavada      Date: 08 Sep 2017 09:32:01


By Niraj Chinchkhede,

In an apparent move to consolidate prices of cement, some of the established manufacturers appeared to have formed a cartel thereby inflating cost of cement by over Rs 50 per bag (in bulk buy category) in last 30 days. The prices that were hovering in the range on Rs 200-205 per bag in early August have now touched to a level of Rs 255-260 per bag (bilk buying) on Thursday. This includes Nagpur delivery and Goods and Services Tax.
Market observers told The Hitavada that players like Ambuja, Ultratech, ACC and Birla Gold have colluded to push the prices even when demand for the cement has not gone up.

Observers said that showdown in real estate sector, implementation of Goods and Services Tax (GST) and the new Real Estate Regulation Act (RERA) among other factors had squeezed the demand for cement and its prices fell significantly in July - August. Interestingly, the market conditions have not changed in the current scenario but cement prices have started flying high, experts in the cement sector said.

“The upswing in the prices is not driven by increased demand but it is only because of the established players who have decided to do so,” said one of the experts on a condition of anonymity.

“It is important to note that companies based in and around Chandrapur are the only manufacturers that have inflated the prices clearly indicating that they together doing it to bring in excitement in the sector,” he said highlighting that prices of cement manufactured by companies located in Chhattisgarh are still trailing behind.

“The established players are basically trying to compensate financial losses which they incurred when the prices fell recently. It becomes financially difficult for the manufacturers to pull-on when prices dip below certain level. In such a scenario, the manufacturers often come together and make attempts to support the prices,” said another expert.

Some of the experts believe that the trend of price rise would continue in coming months as real estate sector is expected to settle down - especially after Diwali. Meanwhile brands like JK Laxmi and Emami sold cement at a cost of Rs 210-215 per bag (bulk buying) while MP Birla’s cement was available at Rs 200 per bag in bulk buy category on Thursday. This includes Nagpur delivery and GST.
Under the bulk buy category which is also called as institutional sale, the consumers have to buy 1200 to 1500 bags of cement in one go.