North India likely to face cement scarcity in 2005 North India likely to face cement scarcity in 2005

After a situation of oversupply, the gap between demand and supply of cement is closing in. Northern India is particularly likely to witness some shortage in the coming months. Gujarat Ambuja Cement (GACL) whole-time director AL Kapur said to reporters from the Financial Express: "Over the next 3-4 months from now, some clusters in northern India may face cement scarcity. There is a long-awaited surge in cement demand in India and only a part of it can be called cyclical." Mr Kapur added that exports from India might also increase from the present seven million tonne to about 10 million tonne next year, an increase of 40-45%. ACC executive director-marketing AK Jain, voicing a similar opinion, said: "Going by the current trend of exports of cement from India, one can expect the exports next year to touch 10 million tonne, which will include cement and clinker." Analysts opine that with the cement demand in the Middle East continuing in the future, exports are expected to be good. 

 ACC is not a major cement exporter, except a few lakh tonne to Nepal. Mr Kapur pointed out that GACL expected its exports to increase by 25-30% next year from the present 3-3.5 million tonne. Mr Kapur added that exports had been doing very well and with the surge in domestic demand, there could be situations when companies would not have enough stocks to ship overseas. Apart from northern India, most other regions are also expected to see a closing-in of the demand-supply gap. Mr Kapur explained that most companies had completed whatever debottlenecking that was possible and no capacity would be added because of that. Analysts feel that on an all-India level, some kind of cement scarcity is possible in about a year. However, the regional impact is not predictable at the moment. Analysts foresee an additional 10% price hike in cement, if such a scarcity really occurs. Mr Jain said, "The demand-supply gap is already very close to each other in the north. If the present 9% growth rate in demand from that region continues next year, there could be some scarcity in later part of 2005."