Cement imports in a spot

A recent hike in cement prices in Pakistan may make imports to India further unattractive. Domestic cement producers, unperturbed by likely imports into the country, are set to benefit with a surge in prices in the neighbouring country, say industry experts.

Market sources confirmed that cement rates in Pakistan had surged by around Rs 20-25 for a bag of 50 kg. "It should impact the landed cost of cement in the country," they said. Cement from Pakistan is expected to hit the Indian market by this month-end.

A few months ago, prices in Pakistan had increased from Rs 170 a bag to Rs 185-190 a bag. The current prices are hovering around Rs 215 a bag in the neighbouring country.

Indian dealers, earlier, had calculated the landed cost around Rs 205-215 a bag. They now peg the landed cost in a higher range of Rs 230-235 a bag. This will bring the cost of imported cement almost at par with the average domestic rates of Rs 225 -230 a bag. 
 

YAWNING GAP Demand-capacity scenario
XI Plan (In mt)	Projected demand	Capacity needed
2007-08	178.79	198.66
2008-09	197.51	219.46
2009-10	218.38	242.65
2010-11	242.16	269.07
2011-12	268.61	298.46
*90% capacity utilisation Source: Report of the Working Group on Cement Industry for the XI Plan

Meanwhile, a further rise in cement prices in the domestic market is expected. A majority of the cement analysts are unanimous with the view that at least a Rs 5 hike is on the cards within a month. They said the receding monsoon and rising cost of inputs, especially coal, would compel cement makers to scale up the rates.

Industry experts also maintained that since January only 7-8 million tonnes of additional capacity had come up in the country. This was not sufficient to meet the country's increasing demand.

In 2007-08 alone, the cement demand is expected to touch 179 million tonnes, whereas the industry's overall capacity with added facilities so far hovers around 174 million tonnes against the required 199 million tonnes.

Meanwhile, the market is abuzz that the cement industry may not continue to get the benefits of coal supply through linkages and it will have to meet its requirement from the open market.