Global cement consumption is projected to average around 2 per cent per year from 2016 to 2021, according to the Global Cement Volume Forecast Report 1H2017 update of the Global Cement Volume Forecast Report (GCVFR).
For 2017, demand is expected to grow following a 2.4 per cent improvement in 2016 and surpass 4.1 billion tonnes. However, global ex-China cement consumption is projected to grow by an average annual rate of 4 per cent until 2021.
‘The continuing rebalancing of the Chinese economy to one driven by domestic consumption, has important implications for the global cement market, and has brought much needed stability in terms of demand expectations not only in 2016 but in the coming years,’ says Robert Madeira, CW Group Managing Director & Head of Research. CW Group’s Global Cement Volume Forecast Report (GCVFR) is a twice-yearly update on projections for cement volumes on a national, regional and global level.
Cement market will stay volatile, says CLSA
Ratings agency CLSA says that it has identified mixed trends as per channel checks, but says that demonetisation still haunts the industry.
Private capex may languish, says CLSA, but the industry is quite hopeful on the government’s infra push. In particular, the industry is excited about affordable housing and most players have done their math on the potential upside from this. Cement prices are highly volatile but seem to be on an uptrend recently in all regions except south India where there is some correction.
However, there are instances of increased trade discounts reversing some of the hikes. Overall, CLSA sees 2017 as a volatile year for pricing and demand is unlikely to see a big uptick. Despite strong long-term opportunity, the agency sees no urgency to chase cement stocks and retains a negative view on the sector.
The report also says that demonetisation continues to haunt several regions.
- Channel checks indicate that demonetisation continues to haunt the industry as demand trends in several markets continue to be under pressure.
- There are still some dealers witnessing double-digit declines in volumes although others indicate that, sequentially, there is improvement.
- Feedback also indicates liquidity is still an issue that has been hampering cement consumption and creating challenges.
- The builder focus seems to be on completing existing projects, and new launches may take time, which further adds to concerns.
- There are high hopes on government spending, and some efforts are visible.
- In general, dealers (and players) are hopeful of a pick-up ahead as government-led infrastructure projects kick off.
- Hopes are running high on the government’s ‘Housing for all’ scheme with certain states (Telangana, for example) even making progress.
- Feedback is very strong for the Andhra Pradesh and Telangana markets where after over five years of challenges, cement demand is witnessing growth.
- Private capex, however, may need time to revive and hence, the government’s role would be critical to drive growth in the industry.
Cement pricing is also showing mixed trends, says CLSA.
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Cement prices in north and central India, which corrected post demonetisation, are on a rise with levels almost back to around pre-demonetisation. Channels indicate that further price hikes are likely due to seasonality and producer discipline.
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The western India markets, particularly Gujarat, which saw severe pressures in the past six months, are also seeing stabilisation and, in fact, prices have risen 7-13 per cent.
However, prices have been quite volatile in these three regions with rounds of price hikes and reversals.
Eastern India continues to suffer from a demand-supply imbalance as capacities that are still ramping up have been exerting pressures. While prices have been rising, there are instances of widening of discounts impacting effective cement prices, notwithstanding the uptrend.
After an almost stable trend for two years, south India too is seeing a declining trend with cement prices down nearly 7-8 per cent in the past three-four months.
CLSA remains negative on the sector, saying that 2017 will be a lacklustre year for the industry as demand is unlikely to see a pick-up; prices will also remain volatile at a time when input costs are firming up.
Luxury housing averts slowdown in realty sector
According to a JLL report, approximately 45,000 luxury housing units were launched in financial year 2016 with the top nine cities constituting 21 per cent of the total residential launches.
Bengaluru leads the list with 30 per cent of luxury home launches followed by Mumbai which comprised 17 per cent of the launches across India. Bengaluru also leads in luxury home sales constituting 29 per cent of the total in financial year 2016 followed by Mumbai reporting 16 per cent of sales. Pune comes third with 15 per cent of sales. In total, 47,000 luxury units were sold in the top nine cities, accounting for 17 per cent of the total residential sales in the country.
‘Evidently, the much-hyped gloom and doom story is vastly exaggerated. Media stories – which predicted that luxury housing in India is finished – lost sight of the fact that luxury housing caters to a specific segment of demand which, like the demand for budget and mid-income housing, has not gone away. India’s wealthier home buyers still want high-class homes with all the bells and whistles of sophistication in great locations,’ said Ashwinder Raj Singh, CEO (residential services) of JLL India.
Vivek Singhal, spokesman of M3M Group, echoed a similar sentiment. ‘The share of luxury housing in the overall housing market may come down marginally. However, this is due to the overall increase in the housing market size. With rapid GDP growth, India is poised to become a $4-trillion economy in the next five-seven years. This will result in substantial increase in the number of millionaires and HNIs, driving the demand for luxury housing. However, luxury housing requires a high level of meticulous planning, positioning, and branding of projects,’ Singhal said.
NGT bans hot mix plants, Noida road works hit
After the National Green Tribunal (NGT) refused to allow sealed hot mix plants to reopen in Noida, road repair and road resurfacing work has been disrupted.
The Noida Authority and the Gautam Budh Nagar district administration had earlier requested the NGT to allow operation of legal hot mix plants so that urgent road repair and road resurfacing work could be carried out.
‘Tribunal chairperson Swatantra Kumar is on leave, so the other bench heard our case. It did not allow the operation of any hot mix plant. So we cannot carry out any road repair or resurfacing work. Now, the NGT is scheduled to hear the case on April 28 and, till then, all repair works will have to be postponed,’ said SC Mishra, Senior Project Engineer, Noida Authority.
The roads in immediate need of repair are Dadri-Surajpur-Chhalera (DSC) road, the 25 km Noida Expressway, Road No 6 and Master Plan-II Road over which an elevated road is being constructed.
Dubai programme incubates start-up for 3D ‘green’ cement printing
A start-up enrolled in Dubai’s Future Accelerators programme has created a ‘green’ cement compound from industrial waste geared for use in 3D printing, reports Gulf-based publication The National.
Renca is a joint venture between Russian businessman Andrey Dudnikov and Alex Reggiani, an Italian. It has created a geo-polymer cement from industrial by-products that uses only a 10th of the energy compared with traditional Portland cement. The company is working with Dubai Municipality to develop its material for use in 3D printing projects in Dubai. The geo-polymer cement and concrete produced from industrial waste such as pulverised fly ash and ground granulated blast slag has greater thermal insulation properties than regular concrete, so is better in hot climates at resisting heat.
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