India’s cement manufacture continues to climb with companies adding nearly 8Mta capacity in April 2009, taking total installed capacity to 219Mta. The industry is estimated to add 40-50Mt of capacity this fiscal year, a 21 per cent increase over the 212Mta installed capacity in 2008-09.
Government ministers are hopeful that output could rise further to 236.16Mt in FY11 and touch 262.61Mt in FY12. The government has boosted cement consumption with various infrastructure projects, road network improvements and housing construction. The rural sector has particularly been a key area of strong cement demand. Cement production in June alone grew 13 per cent to 16.59Mt according to the Cement Manufacturer’s Association. Despite fears of a slowdown amidst the global economic scenario, India’s cement market would appear to be holding up exceptionally well.
The industry has operated at close to maximum capacity utilisation levels and cement dispatches have remained high. However, India’s producers may start looking to the heavens to see whether cement demand trends are set fluctuate in the coming months as the country prepares itself for the monsoon season. Demand for cement could take a hit if reduced rainfall limits harvests thereby impacting on the rural economy. More than 60 per cent of India’s 1.1bn people are dependent on the rural economy, so a good harvest translates directly into increased consumer demand.
Normal and well distributed rains could help the economy expand 6.5 per cent or more. Government policymakers have forecast overall growth of seven per cent this year.