India cement prices to remain under pressure

India cement prices to remain under pressure
Published: 21 January 2009

The short-term demand outlook for cement continues to remain weak and downward pressure on cement prices is expected to continue, an economic think-tank has said.

The Government had, last month, announced an across-the-board cut of four per cent in ad valorem excise duty and in response cement companies cut their prices by four to seven per bag in different regions across the country.

However, this is not expected to provide a major boost to the real estate sector immediately, Centre for Monitoring Indian Economy (CMIE) said in its report here.

Owing to a slowdown in the real estate sector, cement demand has weakened in recent months.

The Central Government and the Reserve Bank of India (RBI) have recently taken several measures to provide a stimulus to the housing and infrastructure sectors.

The RBI accorded priority sector status for housing loans upto Rs 20 lakh.

The Government had also lifted the ban on cement exports from the country.

With a view to provide further relief to the sector, it had reimposed Countervailing Duties (CVDs) on cement imports. This is expected to provide some respite to north-based cement companies, CMIE said.

The cement imports and exports account for a very insignificant portion of total cement produced in the country.

Therefore, the demand-supply dynamics of the domestic industry are unlikely to be significantly affected by the withdrawal of export ban and reimposition of CVDs on cement imports unless there is a revival of demand from the real estate sector, it said.