The demand for cement mainly depends on the level of development and the rate of growth of the economy of the country. There are no close substitutes for cement and hence the demand for cement is price is elastic as far as India is concerned. For the FY 2011 - 12 (Apr - Oct), MT 97.84 was consumed form the 98.91 MT produced.
During the first half of the year, there was marginally poor off take in cement demand due to passive construction activity, which led to excess supply, thus putting downward pressure on realizations. This has been coupled with rise in input costs, especially prices of coal and petroleum products. As a result, both the top line and bottom line have been affected. This demand supply mismatch scenario is expected to prevail for quite some time in the years to come. Good infrastructure development will support demand.