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Near Term Steel + Cement Demand

March 20, 2009

The near-term steel and cement demand is likely to be firm due to: restocking, government funded projects, rural demand, and prices (of steel) likely having bottomed out. However, most are not convinced of its sustainability, except for on-going government projects.

As segmental drivers differ, there is a low correlation in their growth rates. Risk to steel demand comes from general engineering, urban housing, and auto. Risks for cement come from urban housing and the commercial sector. Medium term infrastructure growth should help steel and cement.

Provisional domestic despatch growth of 7.8% YoY in February 2009 was in line with expectations, but lower than the 12-13% YoY growth in November – December 2008.

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