Edelweiss: Cement demand to remain high in India

Edelweiss, a leading broking and investment research firm, says that cement demand is expected to be driven by government projects, which would not be impacted by modest hikes in interest rates.

Further, demand from government backed infra projects remains good and is likely to be the key demand driver going forward. Demand from individual housing segment too has been satisfactory.

It said although demand growth remains unquestionable, excess supply is putting pressure on prices. It is difficult to get supply on stream in a planned manner. In the past 12 months ~35 mtpa of capacity has been added with the demand growth being 20-25 mtpa.

Next year too, 25 mtpa of capacity is likely to get added. However, there is not enough logistical support available to take this supply to the market place. DD-SS equilibrium is likely by FY12. Regional underutilization of capacities can be expected.

Overall, while the pricing situation is likely to be muted for the next 2 years (barring current strong season), demand growth is expected to remain strong, according to Edelweiss.

From China Cement (2010-1-13)