Friday, December 16, 2011: 11:26:26 PM

TJCD Poll Feature

Cement shortage hurting construction business

Scarcity in cement supply has raised prices of the raw material across India and this increasing price trend is likely to continue till June 2012

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Of late, India is facing severe shortage in supply of cement. The unavailability in cement across the nation has skyrocketed prices of the raw material, affecting the construction and real estate sectors at large.

A recent poll conducted by ConstructionBiz360 also indicates alarming results, as 100% voters responded that scarcity in cement supply is hurting the growth of the construction industry.
Construction industry associations and experts have been vocal about the issue and have urged the Competition Commission of India (CCI) and other authorities to look into the matter seriously and address the situation.
Commenting on the prevailing situation, Prashant Solomon, joint managing director at reputed real estate firm Chintels India, says, “The recent steep hike in the prices of cement is not entirely due to the shortage or unavailability of cement in the market. We feel it has more to do with the fact that cement companies are very closely aligned to each other in terms of deciding the price and availability of cement in the market. It has consequently resulted in delayed delivery, which may continue for some more time.” 
“However, we are taking steps to curtail this situation. As members of CREDAI, we have approached CCI to explain to them about the prevailing situation arising out of the shortage in supply of cement. This is a serious issue for all construction linked industries. Therefore, we urge Monopolies and Restrictive Trade Practice Commission (MRTP) to look into this matter and come up with an optimum solution,” added Mr Solomon.
Some experts feel that there is a rigged scarcity in cement production in the market at present and this has been created by the cartel affiliates. Subsequently, it has caused a severe blow to the real estate and construction business as costs went up.
Rahul Samanta, a Kolkata-based cement dealer, says, “Black marketing of cement is being practised as an offshoot response due to demand. The demand is high, but unavailability of the raw material has shot up prices.”
Cement prices to remain firm
Industry analysts forecast that prices of cement is likely to remain high till June 2012. Prices of the raw material are expected to increase to about Rs 300-330 per 50 kg bag over the next couple of months, against Rs 280 per 50 kg bag now. This rise in prices will continue till June next year.
Cement prices in south will not witness much rise as the prices are already at a peak level.

Jeeta Bandopadhyay

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