Cement imports from Pakistan unlikely to tame prices
Wednesday April 25, 06:15 PM
NEW DELHI (Reuters) - Cement imports from Pakistan will marginally ease tight supplies, an Indian industry ministry official said on Wednesday, but analysts said the move would not help curb prices.
Industry Secretary Ajay Dua told reporters the Indian government has cleared the import of 525 tonnes of cement from neighbouring Pakistan
through Mumbai's port, and a smaller quantity through Punjab's Wagah border crossing.
Analysts said the relatively minor imports would not significantly improve a mismatch between demand and supply that has pushed up prices.
"We need to import about 10 million tonnes. Unless it is cheaper and in good quantity, I don't expect any significant impact on prices in the next six months," said Ajit Motwani of Emkay Shares, a local stock brokerage
India cut duties on cement early this month to boost supplies and fight inflation.
In March, domestic firms raised cement prices by 10-12 rupees per 50 kg bag soon after the government hiked duty on domestic output in its Feb. 28 federal budget.
Government officials have been urging firms to roll back the increase without any success.
The imported cement can only be distributed once the Bureau of Indian Standards (BIS) issues clearance certificates to the Pakistani firms. That may take another five weeks, Dua said.
According to the Associated Chambers of Commerce and Industry, Pakistani cement firms plan to supply 10,000 tonnes of cement at 155 rupees per 50 kg bag through the Wagah border, 50 rupees below domestic prices.
D.K. Joshi, chief economist at domestic ratings agency Crisil, said demand would continue to outstrip supply for the next two to three years.
Cement makers have pledged to add 100 million tonnes of additional capacity by 2010 at a cost of 400 billion rupees ($9.78 billion).
The Cement Manufacturers Association of India estimated that output grew 9.5 percent to 155.31 million tonnes during the 2006/07 fiscal year.
Asia's fourth-largest economy is building more roads, ports, airports and power plants and residential complexes to sustain high economic growth.