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Suresh P. Iyengar

Mumbai, Jan. 10 After a lull, cement demand seem to have picked up pace in December with many infrastructure projects taking wings aided by the sharp fall in prices of ancillary items such as steel, cement, labour and transportation cost.

Cement dispatches in December rose 12 per cent to 16.01 million tonnes (mt) against 14.34 mt in November, while production was up 10 per cent to 15.82 mt in 14 mt in November.

Production and sales in October were almost flat at 14.76 mt and 14.30 mt when compared to November.

Apart from revival of infrastructure projects, the recent cut in prices by Rs 4-10 a 50 kg bag after the Government reduced excise duty by four per cent was one of the reasons for demand going up, said Mr Akash Joshi, a Mumbai-based cement dealer.

Many Government-sponsored infrastructure projects have been revived to take advantage of fall in cement and steel prices. Steel companies have reduced prices taking the cue from the sharp drop in iron ore and coking coal prices.

Steel prices have crashed by over 40 per cent to about Rs 31,000 a tonne and are expected to fall further by Rs 3,000 a tonne in June when the companies renegotiate to lower the long-term iron ore contracts.

Cement companies have also managed to cut down on their inventory especially in the northern region as the imports from Pakistan have dried up due to the current tension between the countries.

A decade after the Centre gave the nod for construction of a greenfield airport in Sikkim, work at a cost of Rs 264 crore is set to commence next week at Pakyong. The project includes 30 m wide runway, 1.7 km taxiway and an apron drainage system.

Sewerage project in Punjab and a national irrigation project in Haryana have gone on stream, which are expected to consume about 3,000 tonnes of cement a day.

Construction activity at the Delhi Metro, fly-over and Delhi Airport consumes about 8,000-10,000 tonnes a day, while the new tenders floated for concretisation of roads in Delhi may use up about 2,000-3,000 tonnes a day, said an analyst.

Irrigation, water and housing projects consuming more than 5,000 tonnes a day are being undertaken in Andhra Pradesh.

The resumption of many partly completed road, bridge, and canal projects that need about 7,000 tonnes a day are also going on in full steam. The Bangalore Metro will use up an additional 2,000-2,500 tonnes a day in Karnataka.

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