Rail freight rates up, may impact cement prices

Rail freight rates up, may impact cement prices

Railway freight rates in India have been hiked for key commodities. For coal it is hiked up 6 per cent, clinker and cement by 4 per cent while steel movement became 5.5 per cent expensive. This follows the railways implementing inflation index linked freight rates from April 1. While steel makers have already announced a price hike, cement manufacturers were still contemplating.

In the Railway budget for 2013-14, the Union Railway Minister PK Bansal had said that freight rates will be linked fuel costs factoring in inflation. The budget hiked freight rates for 12 commodities including steel, iron ore, cement and coal. The Railways has adopted a Fuel Adjustment Component (FAC) which will be dynamic in nature and freight charges will be revised twice a year based on changes in input fuel cost.

A price increase of Rs 1,000 per tonne has already been effected by flat steel manufacturers. This is approximately 4 per cent more than that of March prices. Cement makers are contemplating a price increase too. Cement moves from key manufacturing locations like Andhra Pradesh, Madhya Pradesh, Gujarat and parts of northwestern India to other regions. A substantial portion of cement is moved through railway wagons.

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