The Hindu Business Line : Cement demand-supply gap in South may continue

Hyderabad, July 14 The gulf between demand and supply of cement is likely to continue for the next two years and the scenario in South India will improve significantly afterwards, according to industry experts.

In general, the industry is expecting the growth in consumption patterns registered during May-June to continue at the same level or grow further in the next 24 months as new capacity addition could not be achieved before that, Mr K.V. Vishnu Raju, President, All India Mini Cement Manufacturers’ Association and Managing Director of Anjani Cements, told Business Line here.

Consumption figures

“The all-India growth in consumption stood at 12 per cent during May-June while in South India it was at 18 per cent. The growth in Andhra Pradesh was highest at 31 per cent, followed by Karnataka with 20 per cent,” he said.

Albeit some new projects — both greenfield and brownfield — have been announced, the project implementation would take a minimum of 24 months.

“The sourcing and acquiring of machinery alone will take 18 months for any company. Hence, the new capacity can be expected only in 2009-10,” the association’s recently-elected president said.

Going by the number of plants which have already been announced, South India would lead new capacity generation in the country.

“In Andhra Pradesh alone, four to five-million-tonne capacity will be added by 2008-09. The State is on the verge of becoming the cement hub of South India,” he said.

Demand, supply

The supply scenario in the country would be eased after five years from now. Both nationally and internationally, there has been a realisation of the need for massive capacity addition. In the next five years, the supply may catch up with the demand to a significant extent, he felt.

The improvement in global cement scenario could also show positive influence by way of easy import, Mr Raju said, adding: “A good number of new plants are coming up in Saudi Arabia, Africa and Latin America apart from Asia. This may ease out the supply bottlenecks further.”

Domestically, there could be some correction in cement prices over the next two years.

“While we are not expecting a major dip in the prices, there could be some correction consequent to the increase in capacity,” he opined.