Cement prices skyrocket despite declining demand

Tirupati: Cement prices are witnessing a surge despite falling demand for the past five months in the state as construction sector came to a standstill owing to sand shortage.

Cartelisation of cement manufacturers is said to be reason for this price rise which defies convention formula of decreasing demand pulls down the price too. Shockingly, the dealers got a message on November 1, increasing the invoice price to Rs 375 per bag and asking them to sell at Rs 385 to 400. It was almost Rs 85 higher than the previous invoice price and Rs 90-100 over the previous selling price.

The cement dealers were surprised as to what made the cement companies to increase the price by Rs 85 at one stroke as there was no reduction in production or any sudden hike in taxes or raw material costs.

After brainstorming, they have reportedly concluded that the cement companies have raised the price expecting huge demand for cement from government side for Polavaram project works which resumed with a new contractor after High Court gave go ahead.

Probably keeping in view that demand, the manufacturers have hiked prices abnormally for private users too making the situation bad to worse. It was learnt that the manufacturers are not dispatching the stocks to dealers from whom they expect an assurance to sell it above Rs 380 a bag.

Reliable sources said that one company having a stock of about 425 metric tonnes of cement in its godowns in Tirupati, has not dispatched even a single bag since November 1. In Tirupati the demand for cement would be to the tune of 15,000 to 20,000 tonnes per month.

President of Tirupati Chamber of Commerce A Manjunath said that they were expecting a cut in prices due to the prevailing market conditions. The manufacturers have created artificial shortage by cancelling all the orders after the price increase and sent back the lorries empty, he added.

"Many dealers have been selling the old stocks now with a little higher prices and could not venture to buy fresh stocks at this point of time. Already, the sector is moaning resulting in huge losses for the business people.

The future of the sector looks bleak and very uncertain and if anyone put a fresh indent at higher prices may incur huge loses with lack of demand," he opined. On the other hand, the government was losing GST revenue due to all these developments.