MUMBAI: Cement prices are expected to remain weak in the March 2010 quarter and decline further in 2010 2011, an independent economic think tank said.

"We expect prices to remain weak in the March 2010 quarter and decline further in 2010-11," the Centre for Monitoring Indian Economy (CMIE), said.

As new capacities stabilise, these will effectively contribute to cement production in 2010-11. Another 38.4 million tonnes of fresh capacity will come on stream during the year. Healthy demand and aggressive capacity addition will boost production by 13% in 2010-11.

However, a more-than-proportionate rise in capacity compared to despatches will flood supplies in the market and put downward pressure on prices. Capacity addition of 21 million tonnes during April-September 2009 has already triggered a fall in cement prices in the second-half of 2009.

Prices in the north and west zones fell by three to eight%, while the decline in the southern regions was sharper by 15-20%, it said.

However, with the onset of the peak construction season, cement despatches are expected to grow briskly at 12.8%, CMIE said.