Cement cartels to regulate supply

CHENNAI, MAR 14: Cement manufacturers across the country are planning regulation of supply' on a national scale in a bid to shore up the...

CHENNAI, MAR 14: Cement manufacturers across the country are planning regulation of supply’ on a national scale in a bid to shore up the prices by taking advantage of the improvement in demand. Leading manufacturers met in Mumbai on Friday to work out the modalities.

According to sources in Cement Manufacturers’ Association (CMA), the strategy a cartel like operation to artificially jack up prices would be to cut supply into the market which coupled with the increase in demand would see a sharper increase in prices. It is learnt that a formula would be arrived at to decide on the exact quantum of dispatches by an individual manufacturer.

Cement prices which were till recently in doldrums have started to look up thanks to better consumption, essentially on account of the fact that February-March are peak season as far as construction activity. The growth in demand in the southern and western market in February shot up by 13 per cent compared to the corresponding period of the previous year.

In west,especially in Gujarat, prices were ruling as low as Rs 80 per bag of 50 kg late last year but has now picked up to touch Rs 120 to Rs 130 levels while in south, the increases effected by the manufacturers in the last couple of weeks have seen price move up by Rs 15 in Andhra Pradesh, Rs 8 in Tamil Nadu and Rs 10 in Kerala. Another Rs 5 to Rs 10 increase is expected in the southern markets shortly.

It is not the first time CMA is attempting to regulate prices. Earlier in the current financial year, it had attempted to control supply by cutting back production. A roll back in production to the extent of about 10 to 15 days were effected all over the country. But regional price and volume wars upset the arrangement and the production cut had to be suspended as it was unviable at low prices.

In south, the problem was the concept of non-trade sale ie, sale directly to the consumer at a discount to the market price.