In September 2000, Business Line had indicated that the industry could come under pressure due to three factors lower volume growth compared to 1999 2000, cost side pressures and sluggish prices.

The first two happened, but on prices, the prognosis was completely wrong. Prices spurted due mainly to successful stage managing (bordering on a cartel like arrangement) by the industry.

canada goose coats on sale Though the manufacturers have managed to keep the prices at the high levels for some months now, the sustainability is certainly doubtful. What makes the spurt in prices in the last four months somewhat different to the similar uptrends in the past is the geographical spread of the current phenomenon. canada goose coats on sale

cheap canada goose uk Prosperity islands drive uptrend cheap canada goose uk

canada goose black friday sale In the past, price spurts would usually be confined to Tamil Nadu and Kerala which were some kind of islands of prosperity’. But in the past two years or so even these two markets had come pressure with the commissioning of new capacities in Tamil Nadu and Andhra Pradesh, as also the rising interest of many players from other States to cater to these markets. canada goose black friday sale

Canada Goose Online This was the trend canada goose outlet till the third quarter of 2000. Then with producers tightening the supply side arrangement, prices started to move up and ruled at around Rs 170 per 50 kg bag. Some key industry sources were sceptical about the sustainability of the price trends. Canada Goose Online

canada goose cheap canada goose uk outlet For unlike the mid 1990s, the capacities catering to the Tamil Nadu and Kerala markets were somewhat limited. That is not the case now. It is in this context that the recent uptrend stands out and points to a high degree of supply side management. That in these markets, the North East monsoon played truant ensured that there was no traditional dip in prices and volumes. More important, the other markets were caught in a similar trend canada goose outlet store and this helped sustain the firm price trends. canada goose uk outlet

buy canada goose jacket The first inkling of the things to come was the price trend in the AP, particularly the Hyderabad, market. In Hyderabad, where at the best of times prices struggle to go beyond Rs 110 a bag, they doubled to close to Rs 160. With volumes lower than last year, this could not be attributed to higher demand. buy canada goose jacket

By curtailing supplies, phasing them out and by ensuring that no major company or a set of smaller players broke the supply side discipline, the industry ensured a price rise of 20 to 100 per cent in the last four months. But for some firm arrangement between producers, it is unlikely that prices would have moved up across all key markets. In Mumbai, prices crossed Rs 190 a bag while in Delhi, the uptrend was more muted.

canada goose clearance sale In the last quarter of 2000, producers ramped up prices in six rounds in quick succession. The near 12 per cent decline in output was also telling. These high and firm price trend are set to continue in this quarter as well. But looking a little beyond, the industry may get into a surplus mode that could prove costly in the long term. canada goose clearance sale

Some justification and canada goose bomber uk posturing

There is no doubt some justification for the higher prices vis a vis those that prevailed the canada goose retailers uk last three years. For prices of most key inputs have gone up over the years, straining the industry’s the profitability levels. From this perspective, a moderate price increase is justified. But what has happened is that the producers have managed volumes so closely that they have forced big price increases. Perhaps, this may also be a ruse to force the Government to cut canada goose outlet ottawa the excise duty on the plea of passing on to users some benefit.

Canada Goose sale Cement is one of the highly taxed products and given the glut situation, companies were forced to absorb a part of the imposts as also the higher input costs. Through the 1990s the industry had been asking for a cut in the excise duty but with no success. It may also not happen this year considering the strained fisc especially with the Gujarat situation. Of course, the Government has cut the excise duty to zero for cement meant for Gujarat reconstruction. Some demand spurt could come about in 2001 02 as construction activity picks up in the devastated State. This could provide a one time thrust to demand. Canada Goose sale

The sharp rise in prices has attracted considerable adverse attention. Builders associations, at the State and national levels, have expressed concern. There have been indications that they may boycott select brands in an attempt to break the cement cartel. So far they have not had much success. Though an enquiry is pending before the Monopolies and Restrictive Trade Practices Commission (MRTPC), it is unlikely that it will lead to any quick and well implemented decision. The MRTPC has issued notices to a few big companies on the cartelisation issue.

In this backdrop, the industry’s posture is interesting. The sum and substance of its views, expressed by the Cement Manufacturers Association (CMA), is:

Indian cement prices are amongst the lowest in the world; the per tonne ex factory price of Rs 1,090 1,260 is on the low side when compared to many other countries.

Despite rising input costs, prices have not kept pace due to supply overhang.

Cement prices have fallen short of the rise in the wholesale price index, in contrast to other building materials.

The wholesale price index of cement fell 1.1 per cent in 1999 2000 compared to 1995 96.

By curtailing production in the last few months, it is quite likely that the overall output for the year would be around 93 million tonnes, the same as in 1999 2000, or less. In this backdrop, a significant factor is that the considerable demand supply gap would remain cheap Canada Goose or widen this fiscal.

In 1999 2000, when the cement industry registered sharp volume growth of around 15 per cent after growth rates in the first six months averaged close to 20 per cent a narrowing of the demand supply gap and improved producer pricing power were expected. That was the view also of some of the major producers. But the trends this year may peg back the narrowing of the demand supply gap witness last year (see accompanying story).

canada goose uk black friday The industry also appears to projecting a low cost scenario and has sought a 10 percentage point hike in import tariffs. canada goose outlet chicago Concerns over imports making a dent into the market, and the pricing strength in the last four months appear to have surfaced as there has been strong pressure from users to allow imports at lower tariffs. The success or otherwise on this front will be known in a fortnight when the 2001 02 Budget is unveiled. canada goose uk black friday

canadian goose jacket Of crucial interest to the fortunes canada goose uk shop of the industry would be the levels at which the canada goose black friday reddit prices settle from a sustainable perspective. A few things that appear likely are: canadian goose jacket

The current levels may not be sustainable unless there is a sharp improvement in offtake.

Any major spurt from the current levels appears unlikely.

Prices cheap canada goose jackets toronto may decline across markets over time but settle at higher levels than in the past to provide for some improvement in profitability.

A tight supply side management, bordering on a cartel like arrangement, may not be sustainable in the cement industry especially when many majors are jostling for marketshare.

Over the long term, it is only consolidation, better and consistent growth in demand, and a narrowing of the existing demand supply gap that could lead to price levels that are remunerative for the industry without the producers making arrangements of the kind prevalent now.