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 4% in ad valorem excise duty and in response cement companies cut their prices by Rs4-7 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.
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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.
All-India cement production was higher by a robust 12 per cent to 15.8 million tonnes in December 2008.
Aggregate cement production during April-December 2008 posted a rise of 7.25%, a tad slower than 7.74% reported in the year-ago period.
The cumulative cement consumption during April-November 2008 showed a rise of 8.3% as against 10.3% a year ago.