Rising demand from the country’s semi-urban regions and the housing sector is likely to keep cement prices firm for the next few months. The demand for the building material, which saw a sudden spurt in November-December, has not been affected by the continuing economic slowdown.
Despatches growth, which fell to as low as 4 per cent in October, saw a reversal with December witnessing a growth of over 12 per cent.
Amrit Lal Kapur, MD, Ambuja Cements, said, “We are witnessing a robust demand for cement. And I do not see any problem in the next three-four months.”
In February, the company saw a jump of 11.27 per cent in despatches at 1.65 million tonnes against 1.48 million tonnes in February 2008.
The eastern market is witnessing a good demand due to ongoing infrastructure projects. This has resulted in prices rising by around Rs 5 per bag in the region.
Hari Mohan Bangur, president of the Cement Manufacturers’ Association, and CMD of Shree Cement, a major player in the north, said, “We are expecting a 10 per cent growth in despatches this month. There is no slowdown in non-metro regions and the housing sector is generating good demand.”
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The government is likely to go ahead with the promised infrastructure projects, which have got financial closure, as elections will be held soon. This would certainly push the demand, an analyst said.
J Datta Gupta, chief commercial officer, ACC, told Business Standard, “Demand is coming from the retail, semi-urban, low-cost housing segments, apart from the infrastructure projects, and will sustain till June. I think prices will remain firm till that time.” ACC despatches in February stood at 1.75 million tonnes against 1.69 million tonnes in February 2008.
According to analysts, “The industry is doing better than expected.” This demand scenario was expected to continue till April-May, thereby keeping the prices firm, said an analyst. UltraTech, Grasim, India Cement and Madras Cement are likely to add capacities to the tune of 13 million tonnes in the next three months.
In February, cement prices were raised twice. On an average, prices in north India saw a rise of Rs 5-8 per bag (50 kg), whereas the East and central region witnessed a jump of Rs 5-7. The lowest price increase of Rs 1-2 per bag was seen in the southern and western market. The current average price is ruling around Rs 230-235. Though, the last few months have shown a healthy growth in demand, industry experts feel that overall growth rate for the current financial year will be around 8 per cent.