Cement prices will remain subdued

Cement prices will remain subdued

In his address to shareholders last month, India's largest cement maker, Kumar Mangalam Birla Chairman, UltraTech, said that oversupply would continue for another 24-36 months and there would excess of cement supply for the next two-three years and prices are likely to remain subdued unless there is a catch-up in demand with capacity. "The overcapacity continues to plague the industry," said Birla. The domestic cement industry, the worlds' second-largest after China's, has added 100 mt of fresh capacity over the last two years. For this financial year, Birla said, demand was expected to be of 228 mt, while capacity would be 291 mt. "There will be an excess of 63 mt of capacity in 2011-12," he said. Though the last two years saw rapid capacity addition, Birla anticipated it would slow down in the coming years. "There will be an addition of 100 mt in the next five years," he said. UltraTech has an 18 per cent market share. Its capacity stands at 52 mt, which will increase to 61 mt by the June quarter of 2013-14. UltraTech will spend Rs 11,000 crore over the next three years to expand its major projects. It plans to reach an overall capacity of 75 mt. Birla said the company was exploring both organic and inorganic routes to strengthen its position in India. "Over the long term, the cement sector is likely to grow in excess of 8.5 per cent," he said.

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