India: Cement producers have suggested that the industry will be unable to 'absorb' increased freight charges caused by a rise in the price of diesel.
Following a US$0.10/l increase in the price of diesel, the All India Motor Transport Congress (AIMTC) increased freight charges across the country by 15%. The truck drivers' organisation claims to have around 8 million vehicles under its control.
"The increased freight charge is not going only to impact on the distribution of finished goods. Generally, it takes 2t of inputs to produce 1t of cement. So, the impact will be on a total of 3t freight. I don't think the industry is now in a position to absorb this," said, JK Lakshmi Cement whole-time director , Shailendra Chouksey.
Commenting on the impact of the rise in diesel prices, a major cement producer, which preferred not to be quoted, said the rise was high and that this would certainly push up the distribution cost for producers.
Currently, the Indian cement industry faces over-capacity with a utilisation of 76% of the total capacity of 330Mt/yr. According to UltraTech in its annual report the situation is unlikely to improve before 2015.