Stable cement prices expected

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Cement prices in the country are likely to remain stable for the next six months, a grouping of manufacturers said on Monday. “At present, we do not see any price hike or price reduction in the coming six months. In fact, cement prices have gone up by just over 3% in the last ten years, which is even lower than the prevailing inflation rate,” HM Bangur, president, Cement Manufacturers’ Association, said here.

Asked about the shortage of cement in the country, Bangur admitted that six months ago that there were shortages mainly due to logistics and other associated problems, but claimed there was no shortage now. To improve the availability of cement and to meet the rising demand of cement, the domestic cement industry would add 110 million tonne to production capacity in the next three years, at an estimated investment of Rs 50,000 crore.

The government has time and again locked horns with cement companies to arrest its rising price. In the last Budget, the government introduced a dual tax policy for cement based on the price, a move strongly opposed by cement makers. To ease the availability of cement in the domestic market and push prices down, the government also permitted the import of cement at a lower duty from certain countries. In April-November, cement production in the country increased by roughly 8%.

“The cement industry is closely linked to the economy. With the country’s economy set to grow at an impressive 9%, the demand for cement would grow by 11-12%,” Bangur said.

India produces 160 mt of cement and is the second-largest producer in the world. The working group on the cement industry for the 11th Five-Year Plan projected cement demand of 257 mt in the terminal year 2011-12.

Cement manufacturers rubbished the allegation of cartelisation and pointed out that in a country with over 50 cement manufacturers and 135 cement plants, it is impossible to rig prices.