Concrete

Bad News in New Year

Published

8 years ago

December 31, 2016

admin

This December, we were privileged to organise the ICR Cement Expo and Cement Conference concurrently. The theme of the conference was ‘Infrastructure to drive cement demand’. When we planned the conference a few months back, and narrowed down on to the proposed theme, it seemed perfectly logical that the cement demand would look up in 2017, and it also looked certain that new upcoming infrastructure projects will help drive up cement demand, duly aided by the positive effects of a great monsoon on rural housing demand.

Little did we know that on 8th November, an upheaval will be triggered in the economy in general, and in all such sectors which substantially transact in cash, including cement, and all our expectations based on industry analysis, would be rudely belied.

The sudden shock of demonetisation adversely impacted the trade or retail component of cement off-take, because at the cement counters of retailers all over India, bags are purchased mostly in cash. However, different regions of the country were affected differently in the early days of demonetisation. For example, in the early days post 8th November, southern markets withstood the shock much better than the eastern or northern markets. This discrepancy was mostly caused by the difference in the extent to which the cement makers in the regions pushed cement into the distribution pipeline ignoring the drop in retail off-take.

But as time passed, let’s say in December, the southern markets are drying up as well. Overall, the drop in demand has varied widely from 20 per cent to 70 per cent in different regional markets of India, and insiders say that this trend will continue into January 2017. In spite of brave attempts of cement players, prices have started sliding down as well, and some analysts say that prices have corrected by Rs 15-30/bag across markets. As a result, the stocks of cement companies have already fallen by 15-30 per cent since that fateful November day.

As if this was not enough, the industry has been also hit by increasing fuel prices, which account for at least 40 per cent of its cost structure. Prices of pet coke, imported coal and diesel are going up. According to the data from S&P Global Platts, pet coke and imported coal prices rose between 30 and 37 per cent between July and December. The companies and plants which are located far away from domestic coalfields and/or depended more on pet coke as fuel, are going to be affected sharply. Together with the demand shocker and softening of retail prices, this cost push is going to come as a double whammy for a number of cement companies. Margins of cement companies will get squeezed to various degrees as a result of all this.

Coming back to the theme of our conference, it seems that the government’s infrastructure investments, both in the Central and state sectors, will be the only saviour of the cement industry in the next 12 months. Even so, the infra players and EPC contractors, being volume buyers, have quite a lot of negotiating leverage, and therefore, overall profitability of cement is going to take a hit in relation to retail markets.

End of the day, it does seem that everything has got postponed by a year. Let us now gear up to face a year of tribulations, and look forward to 2018 for recovery of the industry. We would like to underline the fact that the fundamental strengths of the cement industry continue to be enduring in the longer term.

Concrete

Jefferies’ Optimism Fuels Cement Stock Rally

The industry is aiming price hikes of Rs 10-15 per bag in December.

Published

3 weeks ago

December 4, 2024

admin

Cement stocks surged over 5% on Monday, driven by Jefferies’ positive outlook on demand recovery, supported by increased government capital expenditure and favourable price trends.

JK Cement led the rally with a 5.3% jump, while UltraTech Cement rose 3.82%, making it the top performer on the Nifty 50. Dalmia Bharat and Grasim Industries gained over 3% each, with Shree Cement and Ambuja Cement adding 2.77% and 1.32%, respectively.

“Cement stocks have been consolidating without significant upward movement for over a year,” noted Vikas Jain, head of research at Reliance Securities. “The Jefferies report with positive price feedback prompted a revaluation of these stocks today.”

According to Jefferies, cement prices were stable in November, with earlier declines bottoming out. The industry is now targeting price hikes of Rs 10-15 per bag in December.

The brokerage highlighted moderate demand growth in October and November, with recovery expected to strengthen in the fourth quarter, supported by a revival in government infrastructure spending.
Analysts are optimistic about a stronger recovery in the latter half of FY25, driven by anticipated increases in government investments in infrastructure projects.
(ET)

Concrete

Steel Ministry Proposes 25% Safeguard Duty on Steel Imports

The duty aims to counter the impact of rising low-cost steel imports.

Published

3 weeks ago

December 4, 2024

admin

The Ministry of Steel has proposed a 25% safeguard duty on certain steel imports to address concerns raised by domestic producers. The proposal emerged during a meeting between Union Steel Minister H.D. Kumaraswamy and Commerce and Industry Minister Piyush Goyal in New Delhi, attended by senior officials and executives from leading steel companies like SAIL, Tata Steel, JSW Steel, and AMNS India.

Following the meeting, Goyal highlighted on X the importance of steel and metallurgical coke industries in India’s development, emphasising discussions on boosting production, improving quality, and enhancing global competitiveness. Kumaraswamy echoed the sentiment, pledging collaboration between ministries to create a business-friendly environment for domestic steelmakers.

The safeguard duty proposal aims to counter the impact of rising low-cost steel imports, particularly from free trade agreement (FTA) nations. Steel Secretary Sandeep Poundrik noted that 62% of steel imports currently enter at zero duty under FTAs, with imports rising to 5.51 million tonnes (MT) during April-September 2024-25, compared to 3.66 MT in the same period last year. Imports from China surged significantly, reaching 1.85 MT, up from 1.02 MT a year ago.

Industry experts, including think tank GTRI, have raised concerns about FTAs, highlighting cases where foreign producers partner with Indian firms to re-import steel at concessional rates. GTRI founder Ajay Srivastava also pointed to challenges like port delays and regulatory hurdles, which strain over 10,000 steel user units in India.

The government’s proposal reflects its commitment to supporting the domestic steel industry while addressing trade imbalances and promoting a self-reliant manufacturing sector.

(ET)

Concrete

India Imposes Anti-Dumping Duty on Solar Panel Aluminium Frames

Move boosts domestic aluminium industry, curbs low-cost imports

Published

3 weeks ago

December 4, 2024

admin

The Indian government has introduced anti-dumping duties on anodized aluminium frames for solar panels and modules imported from China, a move hailed by the Aluminium Association of India (AAI) as a significant step toward fostering a self-reliant aluminium sector.

The duties, effective for five years, aim to counter the influx of low-cost imports that have hindered domestic manufacturing. According to the Ministry of Finance, Chinese dumping has limited India’s ability to develop local production capabilities.

Ahead of Budget 2025, the aluminium industry has urged the government to introduce stronger trade protections. Key demands include raising import duties on primary and downstream aluminium products from 7.5% to 10% and imposing a uniform 7.5% duty on aluminium scrap to curb the influx of low-quality imports.

India’s heavy reliance on aluminium imports, which now account for 54% of the country’s demand, has resulted in an annual foreign exchange outflow of Rupees 562.91 billion. Scrap imports, doubling over the last decade, have surged to 1,825 KT in FY25, primarily sourced from China, the Middle East, the US, and the UK.

The AAI noted that while advanced economies like the US and China impose strict tariffs and restrictions to protect their aluminium industries, India has become the largest importer of aluminium scrap globally. This trend undermines local producers, who are urging robust measures to enhance the domestic aluminium ecosystem.

With India’s aluminium demand projected to reach 10 million tonnes by 2030, industry leaders emphasize the need for stronger policies to support local production and drive investments in capacity expansion. The anti-dumping duties on solar panel components, they say, are a vital first step in building a sustainable and competitive aluminium sector.