Economy & Market

Sluggish market

Published

3 years ago

October 14, 2021

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Cement demand remained subdued during Q1FY14 after witnessing weak growth of nearly 5.5per cent during FY13. This was impacted by lack of construction activity due to Infra and housing slowdown, labour shortage coupled with early onset of monsoons. However, cement prices continued to remain firm after witnessing declines during beginning of Q1FY14.

Cement demand growth

continued to remain sluggish in Q1FY14, impacted by continued weakness in Housing and Infrastructure verticals. Capacity utilization is likely to remain soft. Dealers across regions highlight limited near-term visibility of demand recovery. However, they are hopeful that the election impact would play out in favor for demand uptick in H2FY14, resulting in 6-7per cent volume growth. The demand remains sluggish in most regions and may worsen in the next one month due to monsoon and prices are likely to fall further. Overall, while visibility remains weak for the near term, medium-term demand outlook remains optimistic with several infrastructure/power projects underway.

Weak pricing scenario – lowest since Q3FY11

Cement prices witnessed a bounce-back in the month of May 2013 after two consecutive months of decline. On a pan India basis, they increased by Rs.15 per bag in this month.

However, this was a repercussion of the increase in coal prices and an earlier hike in railway freight charges. Cement producers passed on these cost hikes to their consumer and tried to regain some pricing discipline.

Though prices staged a recovery late in the quarter (post May 15), poor availability of construction materials (sand and bricks), and the early arrival of the monsoon restricted further price hikes. Cement prices in Andhra Pradesh remained low due to political issues impacting construction activities. However, on account of high base prices of last year, cement prices are down 2.3per cent y-o-y, with South (down 4.5per cent y-o-y) being the worst affected region followed by East (down 3.6per cent y-o-y). Cement prices in northern region witnessed correction during beginning of Q1FY14 led by lack of demand and labor unavailability. However, prices have started recovering later and currently range around Rs.270-275 on an average in northern region. Prices have remained largely stable in eastern India but may witness correction as monsoon progresses and demand remains weak.

EBIDTA/tonne could decline due to cost pressures

Aggregate operating cost per MT is expected to grow by 3.5per cent y-o-y and 2.5per cent q-o-q, led by higher energy and freight cost. During the quarter, diesel price increased by 4.7per cent q-o-q, leading to higher freight cost. Power and fuel cost is expected to remain stable at the higher levels despite a 5per cent q-o-q fall in international coal prices, as the decline is partially offset by the rupee depreciation of 3.3per cent q-o-q.

Slowing capacity addition on account of huge surplus

Fresh capacity addition by the cement industry is expected to slow down as demand fails to keep pace with new additions. The industry’s production capacity increased to 325 million tonnes (mt) last fiscal as compared to 219 mt in FY09, registering a compounded annual growth rate of 10.4 per cent. Given the huge surplus situation prevailing in the industry, the pace of capacity addition could decelerate going ahead. The industry may add about 66 mt in the next three fiscals. Going forward, the capacity utilisation rate may improve gradually given the slowdown in pace of capacity addition and recovery in demand.

Outlook

For FY14 as a whole cement demand growth is expected to remain muted at ~6per cent. Profitability for national players could come under pressure if they are faced with increased supply from regional players. The current fiscal is expected to see capacity additions of 30 mn tonnes. FY14 is likely to surprise positively on demand front (though back ended) with a line-up of large state elections. Pricing is expected to remain stable to buoyant as well. Going forward, we expect cement demand to improve in H2FY14 on the back of benefits resulting from likely decline in interest rates, pre-assembly and general election infrastructure spending, pick-up in individual housing/affordable housing and improvement in the execution of stalled projects.

Companies having a strong presence in the southern part of the country may fare well as compared to those located in the northern part as the demand in the southern region looks stronger as compared to that of in northern India.

Post monsoons, prices are likely to firm up led by demand improvement on pre-election spend as well as improved pace of infrastructure awards. One could pick stocks in this sector in the monsoon related weakness as demand revival is expected in H2FY14.

Concrete

15th Cement EXPO: A Step Forward in Cement Innovation

Published

3 weeks ago

January 17, 2025

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Mumbai

Following the immense success of the 14th Cement EXPO, held on December 14-15, 2023, at the Manekshaw Centre, New Delhi, the next edition of this premier event is set to take place in March 2025. The 15th Cement EXPO will be hosted at Yashobhoomi, Delhi, on 12th and 13th November 2025.

Meanwhile, the Cement Expo Forum 2025 is scheduled for 5th and 6th March 2025 at Taj Krishna in Hyderabad. This exciting 3-in-1 event, organised by FIRST Construction Council (FCC) and Indian Cement Review (ICR), will bring together industry leaders, innovators, and stakeholders to discuss the future of the cement sector.

Building on the Success of the 14th Cement EXPO

The 14th Cement EXPO was widely praised for its strong participation, attracting over 1,500 senior managers and decision-makers from across the cement industry. The event was inaugurated by Dr. Vibha Dhawan, Director General of TERI, and Ali Emir Adiguzel, Founder and Director of the World Cement Association, alongside Pratap Padode, Founder of FIRST Construction Council (FCC). The two-tiered exhibition space featured cutting-edge products and innovations from top companies within the cement industry’s supply chain.

The event also garnered significant support from key government bodies, including the Ministry of Road Transport and Highways, Government e-Marketplace (GeM), and the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India (GoI).

Recognition and Excellence in the Cement Industry

The 7th Indian Cement Review Awards celebrated excellence by presenting awards to 11 companies in various categories, recognising their contributions to growth and innovation within the industry. Notably, Parth Jindal, Managing Director of JSW Cement, was honoured with the prestigious Indian Cement Review – Person of the Year Award 2023. Meanwhile, Vinita Singhania, Vice Chairman and Managing Director of JK Lakshmi Cement Ltd, received the Lifetime Achievement Award for her outstanding leadership and contributions to the sector.

A Vision for Sustainability

With the theme of “Driving Sustainability Through Technology,” the 9th Indian Cement Review Conference hosted thought-provoking discussions and presentations, highlighting the industry’s commitment to adopting innovative, sustainable practices. The conference served as a platform for dialogue on the latest technological advancements aimed at transforming the cement sector, addressing key challenges, and fostering growth.

What to Expect from Cement EXPO 2025

The 15th Cement EXPO, along with the 10th Indian Cement Review Conference and the 8th Indian Cement Review Awards, is set to be even bigger and more impactful than the 2023 edition. With an expanded exhibition space, greater participation, and more in-depth discussions, the 2025 event will continue to drive the industry forward. This 3-in-1 event promises to be a pivotal moment in the ongoing transformation of the cement sector.

As the industry evolves, the 15th Cement EXPO 2025 will serve as a crucial platform for showcasing innovations, discussing emerging trends, and forging new partnerships to shape the future of cement and construction.

For more details:

Cement Expo Forum 2025: https://cementexpo.in/forum

15^th Cement Expo 2025: https://cementexpo.in/

FOR CONFERENCE SPONSORSHIPS

Sheetal Talreja

Mob: +91 842 2874 030

Email: sheetal@IndianCementReview.com

FOR EXHIBITION/SPONSORSHIPS

Sujoy Gomes

Mob: +91 865 7795 881

Email: Sujoy.g@ASAPPinfoGlobal.com

FOR SPONSORSHIPS

Ratan Rajbhar

Mob: +91 842 2874 021

Email: ratan.r@ASAPPinfoGlobal.com

Concrete

Construction sector growth slows to 8-10% for FY2025: ICRA

Published

3 weeks ago

January 15, 2025

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The revenue growth for construction companies in FY2025 is projected at 8-10 per cent, down from the earlier estimate of 12-15 per cent, according to ICRA. This marks the slowest growth in three years, driven by factors such as the Model Code of Conduct in Q1, prolonged monsoons, and milestone-based billing in Q2, particularly affecting road-focused players.
ICRA’s analysis of 19 companies with a combined turnover of Rs.1.28 trillion in FY2024 shows modest revenue growth of 1.5 per cent YoY in H1 FY2025. While execution is expected to improve in H2, FY2025 growth remains below the historical CAGR of ~15 per cent (FY2018-FY2024).
Order inflows in urban transport, water and sewage projects are healthy, but road-focused entities face challenges due to muted inflows and high competition. Operating margins are projected to remain range-bound at 10.5-11 per cent, with debt levels rising to manage working capital needs, though debt coverage metrics remain stable.

Concrete

SANY India expands Pune factory to boost production capacity

Published

3 weeks ago

January 15, 2025

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SANY India inaugurated a cutting-edge factory expansion at its 90-acre Pune facility, elevating its production capacity to over 14,000 units annually, alongside a robust fabrication capacity of 100,000 metric tonnes.

The advanced facility reinforces SANY’s commitment to ‘Make in India’ by enhancing localised manufacturing and supporting global exports. Chairman Xiang Wenbo highlighted the strategic importance of India as a global hub, while Vice Chairman Deepak Garg emphasised the expansion’s role in driving innovation and infrastructure development. This investment enhances efficiency, reduces timelines, and strengthens SANY’s leadership in the construction equipment sector.