Cement prices in north may stay firm after CVD rollback

Cement prices may stay firm in the northern region after the government yesterday restored the counter-vailing duty (CVD) and special CVD on imported cement, which was removed 19 months ago to contain inflation.

The domestic players have been demanding the reimposition of CVD on imported cement in order to have a level-playing field. Cement from Pakistan without any import duty and CVD made it cheaper by around Rs 20 for a 50-kg bag in the domestic market. This took away almost 30-35 per cent of the market share in the northern states of Punjab, Haryana, Uttarakhand and Jammu & Kashmir.

Sumit Banerjee, managing director, ACC, said, “Reimposition of countervailing duty and special additional duty on cement imports will surely benefit those cement producers who are present in north-western markets because this will provide them with a level-playing field against Pakistani imports through rail across Punjab borders and into Mumbai through sea routes. More than any significant market advantage, we were requesting for this measure from the point of view of equity,’’ said .

On April 3, 2007, the government had withdrawn the 16 per cent CVD on imported cement and also the special additional customs duty of 4 per cent. The imported cement was already enjoying zero import duty since January 2007.

In the northern market, the average price of the domestic cement is Rs 220 a bag whereas the same from Pakistan was around Rs 200-210 a bag. “Now, with the reimposition of CVD and special CVD, imported cement will become dearer by around Rs 38 a bag, which will make import not possible,” said Bangur.

The latest impact of the imported volume was the shutting down of ACC’s Gagal - II unit in Himachal Pradesh, which was serving northern states. ACC, Ambuja, Shree, Mangalam, Binani, JK Lakshmi and JK Cement are among the north-based players.

Amrit Lal Kapur, managing director, Ambuja Cements, said, “We are happy to have a level-playing field in the northern market, but the step has come at a time when imports were anyway going down in the recent days due to currency movements and the current hostility.”