Cement rises 17 per cent rise in October
The Indian cement sector is finally showing strong signs of revival, with industry shipments recording a 17 per cent growth last month, the highest in recent times, thanks to the surge in housing demand in the northern and western markets. Even as domestic realisations - which held on even during the crucial monsoon months - are facing a sharp decline in many regions, the rather modest industry volumes are finally looking up. Industry shipments last month shot up 17 per cent to 10.6Mt, the highest in the current financial year. Despite the festive season, which tends to pull down cement demand, the industry despatches have grown month-on-month as well, up from 10Mt in September 04. The Cement Manufacturers Association (CMA), the apex industry body, will announce the industry despatch numbers next week.
Sources say that the spurt in demand has been particularly pronounced in the northern and western regions, while the east and the south have remained under-performers. "The volumes grew by around 25 per cent in the northern region, while the despatch growth in the western region has been around 20 per cent," said a top Gujarat Ambuja Cements official. "The demand has been gradually improving since July, although August was an exception due to the transport strike. However, the increase in cement volumes was particularly striking last month, as the industry reported the highest growth for a very long time," the official added.
During April-October ’04, industry despatches, including exports, rose to 70.2Mt from 66Mt during the corresponding period last year. The industry volumes had recorded a modest 5.5 per cent rise in the previous fiscal. Industry observers say that the current spurt in volumes are purely led by housing demand, with very little contribution from the infrastructure and road sectors. "In case demand from big infrastructure projects picks up, this would augment the volume by around 0.5m tonnes per month. We expect the industry to end the fiscal with an 8 per cent plus growth," industry officials said.
The revival in domestic demand comes at a time when export volumes have also picked up, driven by the spurt in international prices. However domestic realisations, which remained buoyant during the monsoon months, have been slipping. Cement prices have fallen by as much as Rs 30-40 per bag in Gujarat due to an intense tussle among cement manufacturers for market share. Cement prices in the southern states have also slipped by Rs 20-25 per bag during the past one month. Industry officials are hopeful that the price situation would improve post-Diwali, which is the peak season for the industry, construction demand will get a boost post-festive season and we expect prices to improve," industry officials said.
