The cement sector is likely to continue at a good growth rate on both the fronts, domestic and export demand. The housing sector and the golden quadrilateral triangle are expected to continue its contribution for higher cement demand domestically.
Industry analysts do not see any the cement cartel cracking up in the near future owing to strong demand. Beginning 2003, prices have increased marginally with the cartel meeting in the first week of January. The meeting reportedly ended with disagreement between two major cartel participants. However, with demand being strong and prices remaining firm, it seems unlikely that the cartel will collapse and a price war would ensue in the near future, analysts said in their reports.
In the quarter ended December 2002, cement prices on average remained around same levels year on year basis. It was higher by about 12-14 per cent compared to the quarter ended September 2002.
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There has been significant improvement in off take in the month of December at 13.9 per cent growth on y-o-y basis and 8.6 per cent on month-on-month basis at slightly subdued prices.
Annual demand for cement in the current financial year is estimated to be 107.21 million tonnes against capacity of 135.75 million tonnes. However, demand is likely to increase to 115.05 milion tonnes as against capacity of 143.44 million tonnes in the next financial year 2003-04.
There are reports suggesting lower offtake owing to the month-long cold wave in northern India. However, analysts said it will have only short-term effect on prices.