Demand for cement in the southern states of Tamil Nadu and Andhra Pradesh has increased sharply in the last two months on the back of higher offtake of the construction sector. The growth in demand in the two states comes in the wake of a lacklustre performance in the earlier months of the current fiscal.
The average price of a cement bag (50 kilograms) in Tamil Nadu is about Rs 150, up by about 7 per cent since mid-November. Despite the firm trend in price, it is yet to reach the level of Rs 160-175 that prevailed around September 2004. In January 2005, cement demand in Tamil Nadu was 8.13 lakh tonne, up 16 per cent over the previous January. In December 2004 too, demand increased by 16 per cent over the previous year to register 8.08 lakh tonne. The sharp rise in demand in the last two months in Tamil Nadu is at odds to the earlier situation. Consequently, the total demand in the current financial year (April-January) grew by just 2 per cent over the previous year to stand at 7.65 million tonne.
A cement company official said that the growth in demand in Tamil Nadu had been driven largely by the construction industry. Demand from the state government on account of infrastructure development is believed to be insignificant. Anaemic demand from the state government has also hurt cement consumption in Karnataka, the other major market in south India. Karnataka’s demand in the current financial year (April-January) was 6.42 million tonne, a decline of 7 per cent in relation to the previous year.
Andhra’s cement consumption in the current fiscal mirrored that of Tamil Nadu; lacklustre performance till November followed by a sharp increase in despatches. The total cement demand in Andhra in the April-January 2005 period was 6.39 million tonne, about 2 per cent lower than the previous year. Andhra’s geographic location has provided benefits. Cement industry officials said that robust growth in demand in Maharashtra had drawn shipments from some plants in Andhra.
The demand for cement in the southern region is at odds with the overall trend. In the April-January 2005 period, demand in south stood at 26.38Mt, almost the same level as the previous year’s 26.29 million tonnes. The national demand in contrast grew by 7 per cent in April-January 2005 to stand at 99.56Mt.