Cement prices at the country's commercial capital crashed to Rs 135 per 50-Kg bag in the first week of September from around Rs 150 per bag in July. Analysts say the prices have touched rock bottom in the region due to large supplies from neighbouring Gujarat, where prices are ruling at far lower levels.

However, the western Indian markets are unlikely to be rescued immediately through an informal cartelisation of the sort that has been worked out by manufacturers in south India.

Most of the western Indian plants, say analysts, are relatively new, and therefore to reach their break-even levels, these companies have to push volumes. Such high volume marketing will not allow pricing arrangements to be worked out immediately,say the industry watchers.

The western Indian price crash has begun largely due to a Gujarat contagion. With export prices low, the cement that was earlier heading out is now finding its way to nearby domestic markets, including Mumbai, as well as south India.

Even the monsoons had its role to play, but analysts point out that the Mumbai prices during the same period last year were much higher, and the oversupply situation may pull down prices further.

In June this year, for example, prices were ruling at around Rs 158 per bag, as against Rs 165 during the same month last year.

Prices in recent months have firmed up in the southern markets as realisations have zoomed in Tamil Nadu, Kerala and Karnataka. In Chennai, prices have peaked to over Rs 175 per bag, as producers slashed output by over 15 per cent by operating only 23 days a month. Cement prices in Chennai had fallen to around Rs 150 during June-July this year, as cheaper cement from Gujarat was finding its way to the southern markets.

Infact, analysts say, that over 20,000 tonnes of cement was being shipped to Kerala from the region by Gujarat Ambuja. Faced with a free fall in prices, local producers got together to deliberately cut production. Cement prices, as a result, shot up in the region with Bangalore prices touching Rs 180 per bag from Rs 167 per bag in July.

Analysts point out that monsoon, which arrives late in this region, also had an impact on the price rise, as producers scale down production to address the falling demand.

The Hyderabad prices, which traditionally remains weaker than the other centres in the region, has inched up to Rs 140 per bag, as against Rs 127 per bag two months back. Retail cement prices at Hyderabad had been ruling at Rs 130 in July last year.

Industry watchers say that although the south India prices have gained substantially in recent months, the current month may see a marginal fall in prices in the region.

The process of price recovery has also had its impact in eastern India with prices inCalcutta zooming to Rs 170 per bag, the highest in recent months, from Rs 159 per bag in July.

The realisations during June-July last year were far lower around Rs 140 per bag.

In the North, cement prices have remained fairly consistent without any major fluctuations. Prices in Delhi are ruling at around Rs 135 per bag, at approximately the same levels as it existed during the corresponding period last year.

In July, cement prices in Delhi ruled at Rs 134 per bag, as against Rs 136 per bag in the previous month. The relative retail prices during June last year was hovering at Rs 135 per bag, while July 1997 prices were a rupee higher per bag.