SOUTHERN RECOVERY Cement despatches grow 9.4% in January

Chennai: Cement dispatches—an indicator of construction activity across sectors—recorded a 9.4% growth in January 2012, third straight month of high growth due to low base effect. Dispatches in January 2011 witnessed a meagre 1.1% growth. 

    Dispatches grew to 20.4 million tonnes in January as against 18.6 million tonnes in the year-ago period. Cement production registered an increase of 10.6% at 20.6 million tones, according to data from the Cement Manufacturers Association and Holcim Group, promoter of ACC and Ambuja Cement. In April-December 2011 cement consumption grew 17% in the western market, 10% in the northern market, 8% in the central region, and 3% in eastern market. Consumption fell 14% in Andhra Pradesh, 8% in Jharkhand, 6% in Himachal Pradesh, and 4% in Bihar. Gujarat recorded a 20% rise in offtake, Punjab and Orissa, 15% each, and Maharashtra witnessed a 14% growth. 
    "We are witnessing first signs of growth after a twoyear lull in South India. 
Housing demand from Bangalore is strong, while state government-funded projects in Andhra Pradesh are starting out. Tamil Nadu is also seeing growth," said Rakesh Singh, president (marketing), The India Cements, south India's largest cement maker by volume. 
    Capacity utilization levels in January rose to 82% as against 80% in January 2011. 
    "This (growth) was due to the low-base effect and a pickup in demand. The low base effect will fade off in February and March. Dispatches during January grew 15.8% in the north, 11.5% in the south and 1.9% in the east," analysts at Anand Rathi Securities said in a note. "In the first half of February, prices have increased by Rs 5 to Rs 15 a 50kg bag in the western, the eastern and the central regions, while they were stable in the north and the south." 
    Demand in February has picked up and been better than in January. Most dealers expect prices to firm up this quarter, led by controlled supply and a pickup in demand, the note said.