Cheap imports rattle cement companies

After steel, the depressed cement industry is facing the onslaught of cheap imports from neighbouring countries, especially from Pakistan and China.

The imports are exerting pressure on cement companies, which are already operating much below their rated capacity due to weak demand.

Cement demand growth has hit a decade low of 2.2 per cent in the first nine months of this fiscal as the stressed housing and infrastructure companies are cutting down on their projects.

Earlier, the Centre had fixed minimum import price to protect the steel industry from large scale imports.

Shailendra Chouksey, President of Cement Manufacturers’ Association and Whole-time Director, JK Lakshmi Cement, told Business Line about one lakh tonne of cement comes a month from Pakistan (through Wagah-Attari border) and huge quantity of clinker are imported from China at very cheap prices.

Cement companies are worried that the cheap imports will start dictating the price tags of the huge quantity of cement produced domestically.

In the southern region, Kerala government-promoted Malabar Cement is developing a cement hub at an investment of ₹176 crore to import cement clinker and other allied building materials. It has taken seven acres on lease near the Kochi port for 30 years and expects a throughput of about 1.35 million tonne a year. Malabar Cements is already importing clinker and there are three cement terminals in operation at the Kochi port.

The demand erosion has hit the sector hard, with over 100 million tonne of capacity remaining idle in India and this is further aggravated by dumping of cement clinkers by China and other Asian countries, said Chouksey.

Raising doubts on the government’s GDP numbers, he said the actual offshoots of economic growth are not visible with cement demand remaining muted with large capacity overhang and car sales are slowing down.

“What is more striking is that despite low inflation for a sustained period and more purchasing power, consumer discretionary spending remains subdued, which in turn is delaying private investments,” he said.