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Lack of big govt investment plans hits sentiment

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Industry was expecting investment booster to the economy through various construction and infrastructure projects post-polls, and the demand was affected as these hopes were belied.

With increase in monsoon footprint and intensity in July 2019, pressure points were visible on cement demand, adding to the earlier pressures created by continued lull post-election, belying the expectations of the industry on increased project spending by the government.

The ET Cement Index that tracks cement price movements across the country has unusually remained flat/stable at 2,397.3 points between end-June and beginning of August 2019, after a marginal fall in June.

However, channel checks by the leading brokerage, CLSA indicated weakened cement demand trends in July across markets due to tough macro, tight liquidity, lull post elections on government spending, monsoon etc. The Union Budget 2019-20 for full year released early July proved to be a dampener, lacking in any big ticket investment plans.

Cement prices were down 7-10 per cent MoM in Andhra Pradesh & Telangana, while east has seen ~4 per cent MoM decline. Prices in north, central and Gujarat are down 1-2 per cent MoM, CLSA’s recent channel checks found.

"A part of the price correction is due to seasonality as construction activity tapers off during monsoons. However, the channel expects further pricing corrections in next few months as demand is likely to pick-up only post monsoon. We currently forecast 4-6 per cent Quarter-on-Quarter (QoQ) decline in realisations for our coverage during 2QFY20 and there is a possibility of earnings cuts in south-based players, if there are further (price) cuts," says Vivek Maheshwari, Investment Analyst of CLSA, in a report released on July 31, 2019.

"There has been a notable improvement in the cumulative rainfall received as the cumulative deficit has reduced from (-)19 per cent for the week ended 24 July to (-)9 per cent for the week ended 31 July," says Madan Sabnavis, Chief Economist, CARE Ratings in a report titled Weekly Monsoon Monitor dated August 2, 2019. Steep rise in prices in April and May 2019 have weakened the demand, curtailing the pricing power of the industry in the following months. In June, ET Cement Index eased 1.39 per cent at 2397.3 from the all time peak of 2431.1 points registered at the end of May 2019. With sharp 8 per cent Month-on-Month (MoM or compared to the previous month) hike pan-India in April, average trade prices in April-June were up by 11 per cent Quarter-on-Quarter (QoQ).

According to CLSA’s channel checks, across regions demand has been generally weak with very high pressures visible in the states of Andhra and Telangana post elections as activity has slowed down quite a bit, taking the July prices down 6-7 per cent versus 1QFY20 average for the south as a whole. In the east, prices have also been cut by 4 per cent Month-on-Month (MoM) in July, which is down 5 per cent versus 1QFY20. North, central and west (Gujarat) have seen 1-2 per cent MoM cuts in July and this is similar when compared with 1QFY20 average as there were strong hikes in the earlier quarter.

Drying up of funding sources for construction contractors has impacted construction activity in general, raising concerns over cement demand. Availability of sand has also been highlighted as an issue in some places, impacting construction activity.

Monsoon progress
The progress of the south-west monsoon reveals a notable improvement for the week ended 31 July with the cumulative rainfall deficit reducing to (-) 9 per cent and the number of sub-divisions recording deficient rainfall being 14, out of 36 divisions across the country. The rainfall deficit of (-) 9 per cent during the current season is at a 5-year high, according to Indian Meteorological Department (IMD).

Improved rainfall position coupled with relatively better distribution of rainfall bodes well for the crop production.

Spatial and temporal spread of monsoon in the sowing season will impact the agricultural crop outcomes and consequently, rural incomes, based on which the demand for cement from rural areas will be impacted. That is, a good monsoon can boost demand for cement due to increased construction activity.

The sowing crop situation as of 26 July’19 has also seen an improvement for a few kharif crops namely maize, urad, sugarcane and cotton as the sowing for the current season has been higher than the normal. However, the sowing of key crops namely rice, food-grains, bajra is significantly lower than the normal, according to CARE Ratings’ analysis.

Looking ahead
"IMD is expecting monsoon to be normal in August and September and is likely to be 100 per cent of the long period (50 years) average. In the balance two months, the progress of sowing and in turn the food production would be critical for overall consumer and wholesale inflation to remain benign," says CARE Ratings.

Maheshwari says, "Our interactions with industry players indicate that the demand is likely to pick-up only post monsoons, but we see lesser optimism at this stage on an imminent pick-up in the next few months due to tough macro conditions."

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Concrete

Efficient Cooling Solution Boosts Gearbox Uptime

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Efficient Oil Cooling for Gearbox in the Cement Industry. How a High-Performance Plate Heat Exchanger Ensured Thermal Stability and Operational Continuity.

Contributed by: Narendra Joshi and Sourabh Mishra

Application: Gearbox Oil Cooling
Objective: To maintain optimal oil temperature in high-viscosity lubrication systems for gearboxes in cement plants, ensuring uninterrupted operations and minimizing production losses due
to overheating.
Challenge: A prominent cement manufacturing company’s conventional cooling systems were failing to maintain the oil temperature within the optimal range, jeopardizing equipment performance and leading to avoidable downtime.

Background with the Existing System
In heavy-duty industrial applications, particularly in the cement industry, gearboxes are critical components that must operate under high mechanical loads and harsh conditions. These gearboxes rely on lubrication systems where oil plays a dual role, lubrication and heat dissipation. A recurring challenge in such setups is managing the temperature of the gearbox oil. When oil heats beyond a critical limit, its viscosity drops, reducing its ability to form a protective film. This leads to increased friction between components, heat generation, and eventual damage to gearbox components — directly impacting plant uptime and production output.

Delivering Sustainable Heat Transfer Solution with HRS FUNKE High Efficiency Heat Exchanger
This system was selected for its:

  • Excellent thermal performance, ensuring rapid and efficient oil cooling even with high-viscosity fluids.
  • Leakage-proof operation, with no cross-contamination between cooling water and lubrication oil.
  • Robust design, capable of withstanding high operating pressures and variable flow conditions.

The plate exchanger was custom configured based on the oil’s properties, desired outlet temperature, and ambient heat load, ensuring that the oil remained within the specified viscosity range necessary for maintaining gearbox operation and lubrication integrity.

Performance Benefits Delivered

  • Oil temperature control and maintained consistently within target range
  • Viscosity stability and prevented breakdown of lubrication film
  • Equipment reliability and reduced risk of gearbox overheating or failure
  • Production continuity and eliminated unplanned stoppages
  • Long-Term savings and lower maintenance costs and extended oil life

Solution: To address the problem, HRS Process Systems Ltd recommended the installation of a Funke Plate Heat Exchanger a compact, high-efficiency thermal solution engineered specifically for industrial lubrication oil cooling.

Conclusion: The customer achieved precision oil temperature control, ensuring that the gearboxes operated at optimal conditions. This not only safeguarded the mechanical integrity of the gearbox but also directly contributed to higher plant uptime and improved production efficiency in heavy industries like cement manufacturing.

(Communication by the management of HRS Process Systems Ltd)

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Concrete

How Upgrades Can Deliver Energy Savings Across the Cement Process

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Jacob Brinch-Nielsen, Vice President of Professional Services, FLSmidth Cement, brings together recommendations from experts across the flow sheet to demonstrate the role of upgrades in optimising the cement manufacturing process.

Improving energy efficiency in material transport
Pneumatic conveying offers a cleaner and more contained alternative to mechanical conveying. However, pneumatic systems can also be energy-intensive, with inefficiencies arising from air leakage, pressure losses, and outdated equipment designs. Optimising these systems can significantly reduce energy consumption and operating costs.
“One major challenge is maintaining efficient air-to-material ratios, as excessive air use leads to unnecessary power consumption,” explains Emilio Vreca, Manager of PT Product Engineering “Leaks in piping and inefficient compressors further compound energy losses. To address these issues, upgrading to the latest pneumatic conveying solutions can yield substantial improvements.”
The latest pump design—the Fuller-Kinyon® (FK) ‘N’ Pump—provides power savings of up to 15 per cent thanks to an improved seal, while an extended barrel and screw design have improved volumetric efficiency by more than 15 per cent. Similarly, the latest generation Ful-Vane™ Air Compressor has been engineered for increased energy efficiency, with an improved inlet area for capturing larger air flows and compatibility with variable frequency drives.

Optimising energy efficiency in packing and dispatch
Even minor inefficiencies in bagging and palletising can lead to higher maintenance demands, increased material waste, and unnecessary energy use. Reducing these inefficiencies is yet another lever to improve overall plant performance and sustainability.
Upgrading rotary packers enhances weighing accuracy, reduces spout-to-spout variations, and lowers reject rates, improving both product consistency and energy efficiency. Similarly, replacing pneumatic drive systems in palletisers with electric alternatives eliminates compressed air dependency, leading to more precise bag handling and reduced energy demand. These targeted upgrades help streamline operations while minimising environmental impact.
A key development in dust control is the FILLPro™ Dust Reduction Kit for GIROMAT® EVO. “By refining material flow and fluidisation, FILLPro reduces dust emissions at the source, improving bagging efficiency and plant cleanliness,” explains Gabriele Rapizza, Proposal Engineer. “This reduces material loss, prevents blockages, and cuts down on maintenance, helping plants achieve a more stable and energy-efficient packing operation.”

How services contribute to increased energy efficiency
In the past, many viewed the role of the supplier as a “sell-and-move-on” model. Things have certainly changed. As cement producers face challenging markets, heightened competition, and increasingly ambitious decarbonisation targets there is little room to tolerate inefficiencies within the plant. The paradigm has shifted such that the value of expert services is as essential as the initial equipment supplied. Furthermore, as digital solutions progress at speed, a fluid, long-term partnership gives cement plants the best platform to take advantage of the latest tools.
Whether it’s an audit to identify why energy efficiency has decreased from one year to the next, or even an optimisation package preparing your plant for carbon capture solutions – we are believers in the principle that there is always more we can do to improve efficiency. For example, our Online Condition Monitoring Services (OCMS) provide continuous monitoring of critical equipment such as the kiln, mills, cooler and fans, aggregating data and utilising advanced algorithms to identify potential trouble spots. As the OEM and an experienced full solutions provider, we can support these services with expert advice, not only alerting you to a problem but also providing recommendations as to how to remedy it or attending site to support you in person.

Small upgrades, big impact
Energy efficiency is a critical factor, influencing both operational costs and sustainability goals. While large-scale innovations such as carbon capture will play an essential role in long-term decarbonisation (and steal the headlines), incremental mechanical upgrades offer an immediate pathway to lower energy consumption with minimal disruption.
By optimising key process areas — grinding, dosing, combustion, cooling, and material transport — you can achieve measurable energy savings while improving performance and flexibility. These solutions provide a strong return on investment and pave the way for a more sustainable cement industry.

Part 3 of 3. Read Part 1 in the May issue of Indian Cement Review and Par 2 in the June issue of the Indian Cement Review magazine.

(Communication by the management of the company)

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Economy & Market

Hindalco Buys US Speciality Alumina Firm for $125 Million

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This strategic acquisition marks a significant investment in speciality alumina, a key step by Aditya Birla Group’s metals flagship towards becoming future-ready by scaling its high-value, technology-led materials portfolio.

Hindalco Industries, the world’s largest aluminium company by revenue and the metals flagship of the $28 billion Aditya Birla Group, has announced the acquisition of a 100 per cent equity stake in US-based AluChem Companies—a prominent manufacturer of speciality alumina—for an enterprise value of $125 million. The transaction will be executed through Aditya Holdings, a wholly owned subsidiary.

This acquisition represents a pivotal investment in speciality alumina and advances Hindalco’s strategy to expand its high-value, technology-led materials portfolio.

Hindalco’s speciality alumina business, a key pillar of its value-added strategy, has delivered consistent double-digit growth in recent years. It has emerged as a high-growth, high-margin vertical within the company’s portfolio. As speciality alumina finds expanding applications across electric mobility, semiconductors, and precision ceramics, the deal positions Hindalco further up the innovation curve, enabling next-generation alumina solutions and value-accretive growth.

Kumar Mangalam Birla, Chairman of Aditya Birla Group, called the acquisition an important step in their global strategy to build a leadership position in value-added, high-tech materials.

“Our strategic foray into the speciality alumina space will not only accelerate the development of future-ready, sustainable solutions but also open new pathways to pursue high-impact growth opportunities. By integrating advanced technologies into our value chain, we are reinforcing our commitment to self-reliance, import substitution, and building scale in innovation-led businesses.”

Ronald P Zapletal, Founder, AluChem Companies, said the partnership with Hindalco would provide AluChem the ability and capital to scale up faster and build scale in North America.

“AluChem will benefit from their world-class sustainability and safety standards and practices, access to integrated operations and a consistent, reliable raw material supply chain. Their ability to leverage R&D capabilities and a talented workforce adds tremendous value to our innovation pipeline, helping drive market expansion beyond North America.”

An Eye on the Future

The global speciality alumina market is projected to grow significantly, with rising demand for tailored solutions in sectors such as ceramics, electronics, aerospace, and medical applications. Hindalco currently operates 500,000 tonnes of speciality alumina capacity and aims to scale this up to 1 million tonnes by FY2030.

Commenting on the development, Satish Pai, Managing Director, Hindalco Industries, said the deal reinforced their commitment to innovation and global expansion.

“As alumina gains increasing relevance in critical and clean-tech sectors, AluChem’s advanced chemistry capabilities will significantly enhance our ability to serve these fast-evolving markets. Importantly, it deepens our high-value-added portfolio with differentiated products that drive profitability and strengthen our global competitiveness.”

AluChem adds a strong North American presence to Hindalco’s portfolio, with an annual capacity of 60,000 tonnes across three advanced manufacturing facilities in Ohio and Arkansas. The company is a long-standing supplier of ultra-low soda calcined and tabular alumina, materials prized for their thermal and mechanical stability and widely used in precision engineering and high-performance refractories.

Saurabh Khedekar, CEO of the Alumina Business at Hindalco Industries, said the acquisition unlocked immediate synergies, including market access and portfolio diversification.

“Hindalco plans to work with AluChem’s high performance technology solutions and scale up production of ultra-low soda alumina products to drive a larger global market share.”

The transaction is expected to close in the upcoming quarter, subject to customary closing conditions and regulatory approvals.

 

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