Concrete

Cement industry to witness improved demand from July 2021

Published

4 years ago

March 5, 2021

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According to CARE Ratings, the demand for cement will improve in a calibrated manner from July 2021 onwards. CARE Rating states that a double-digit cement volume growth seems unlikely at present for FY22, considering the uncertainty for the constantly evolving covid situation in the country. However, it also states that the profitability for cement players expects to remain healthy during FY22, considering the factors such as expected higher volumes and continuing pricing power enjoyed by cement companies which are likely to balance the cost pressures considerably. In terms of debt, most of the cement companies will be seen to continue their focus on strengthening their balance sheet during FY22. Moreover, report says that profits for FY22 will remain moderate due to increasing input costs for pet coke, diesel, coal, and packing materials, etc.

Today, the economic conditions of our country remain volatile. Considering this into account, the unlocking process that was earlier predicted for May 2021, has now been pushed to July 2021. This has affected the overall demand for cement for Q1FY22. The second wave came with a lot of uncertainties and shattered the overall demand during the last quarter of FY21. On the one hand, we see that the supply constraints are low because of the reopening of operations for the cement manufacturing companies; however, with a higher rate of infection in the rural areas, the demand for cement from rural got weaker.

CARE Ratings expects that for FY22, the domestic cement production may grow by around 4%-7% y-o-y after two consecutive years of de-growth against the initial estimate of 11%-14%. Demand for cement will directly depend on factors like the government?? push and spending towards infrastructure creation and development, pent-up urban demand, and continuing rural demand. However, the severity of ongoing pandemic will have direct impact on the timelines for demand revival for the cement industry.

Looking at Q1FY21, which was severely hit by the pandemic, the industry witnessed a swift recovery wherein domestic cement production reached 88% of pre-Covid levels (i.e., 88% of Q2FY20, states CARE Rating report. It further reports that during Q2FY21 and for Q3FY21, production was 96% of the corresponding period the previous year. Monthly domestic cement reached pre-Covid levels during March 2021 and was approximating to March 2019 levels. Overall, the domestic cement production has fallen by 12% during FY21 vis-?-vis FY20 as against the initial estimate of de-growth of 25%-30% made in April 2020.

For FY22, CARE Ratings estimates its entire portfolio of investment-grade cement companies will report stable performance with the aggregate rated debt of around Rs.23,964 crore. Most cement companies will be focusing on strengthening their balance sheets. However, it also states that the profitability for cement players is expected to remain moderate during FY22, due to increasing input costs especially for pet coke, diesel, coal, and packing materials, etc. Furthermore, CARE Rating also states that the liquidity for a majority of the CARE-rated investment grade portfolio is likely to remain strong or adequate in FY 2022.

Some of the key drivers identified by CARE Rating are-

Positives

Increased capital outlay towards infrastructure creation by 26% to Rs.5.54 lakh crore
Enhanced outlay of Rs.1,18,101 crore for MoRTH of which Rs. 1,08,230 crore is for capital.
Central Counterpart Funding to various metros aggregating to Rs.88,059 crore
Proposals to further incentivize and boost affordable housing.
Pent up urban demand and continuing rural demand.

Negative

Slow pick up of demand with ongoing Covid II
Increase in input costs
Excess capacities

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

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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

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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

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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.