Analysts say this is expected to drag down price realisations during the third quarter for the south-based cement-makers, which include India Cements, Madras Cements, Larsen & Toubro and the Kumar Mangalam Birla-owned Rajashree Cement.

Earlier in the second quarter, according to analysts, prices had climbed in the south as the companies had worked together to raise rates by several notches, to sidestep a serious overcapacity problem.

Cement prices in Chennai have now slid to Rs 160 per bag, from over Rs 180 per bag during the past two months. The price situation is equally grim in Kochi where realisations have fallen sharply from Rs 195 to Rs 180 per bag ahead of the monsoons.

The sudden drop in the southprices, say analysts, have resulted from the dual impact of large capacity additions and the fall in demand due to lower construction activities during the monsoons.

"The monsoons arrive late (November-December) in the south, and the additional output from the new capacities is adversely impacting the price in this lean period," said a cement analyst.

An India Cements senior official said: "Price realisations have dropped during the last few days due to the monsoons, although we are confident that prices will again start picking up by next month."

In Tiruvanthapuram, prices dropped by around Rs 15 per bag to Rs 175, while prices at Hyderabad, traditionally a low-price centre for cement, is hovering at around Rs 105 per bag. Cement prices in Andhra Pradesh, say analysts, are historically low as the huge limestone deposits in the region.

The region has witnessed sizeable capacity additions in recent times with Larsen & Toubro commissioning a 1.75 million tonne capacity cement unit at Tadipatri andVishaka Cement commencing trial runs for its 0.9 million tonne facility. The Tadipatri unit, however, operated at just over 50 per cent capacity utilisation during the first six months of the current financial year.

"Capacity additions in the region has been close to three million tonnes and this, it appears, has been instrumental in pulling down the cement prices in the region," said an analyst.

The depressed price scenario is also evident in the western part of the country, as prices in Mumbai have dropped sharply to only around Rs 130 to Rs 135 per bag, against Rs 160 to Rs 165 per bag during the last two months. The situation is worse in Gujarat where prices have fallen further to below Rs 90 per bag.

Cement companies operating in the eastern region, on the contrary, have gained handsomely on the price front as rates have shot up to record levels in recent months. In Calcutta, retail prices are ruling at Rs 170 to Rs 175 per bag, which has been among the highest realisation in recentmonths.