As a result, cement prices in Mumbai, which had hit rock bottom earlier this month, have gone up to around Rs 140-145 per bag. Analysts say that the latest move is an attempt by cement makers to pre-empt a free fall in cement prices during the monsoon.

"The current prices are still around Rs 20-25 per bag lower than what was during the same period last year. It would be difficult to go for another round of price hike at this stage as demand have started to weaken due of the monsoons," said a Gujarat Ambuja official.

A section of the industry, however, is quite bullish that the monsoon will not be a big dampener on the prices. "We do not think that prices will slip sharply during the monsoons. There should not be a problem to hike prices by another Rs 5 per bag in the first week of July," said an ACC official.

The margins of cement makers had come under tremendous pressure due to the sharp dip in prices in the city. Prices had dropped to around Rs 130 per bag primarily due to oversupply as small makers from neighbouring states, primarily Gujarat, dumped cement in the local market.

"With cement prices under pressure, many of the smaller producers from Gujarat have reduced supplies to the Mumbai market. As a result, prices are again on their way up," said an industry observer. Prices in Gujarat, which is generally lower than that in Mumbai, have also shown marked improvement in recent weeks to consolidate at around Rs 126-128 per bag.

Analysts point out that the price surge in the city, like that in Gujarat, has been possible due to a joint effort by local players. "Local players have come together to prop up the prices in Gujarat. The arrangement seems to be working well. Companies, hit hard by the recent price depression, are now trying out a similar arrangement in the city," said an analyst.

Says an L&T official: "Realisation are still under pressure as cement prices during the first quarter has been much lower than last year. We are optimistic that prices will move up in the coming months."