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Cement demand bounces back

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With the onset of the final quarter of FY22, CareEdge expects cement prices to trend higher due to pick up in the overall construction activities giving a boost to cement demand. CareEdge (CARE Group) is a knowledge-based analytical group and is one of the leading credit rating agencies in India.

After gaining pace in October 2021, the demand offtake fell unexpectedly in November 2021 owing to construction bans in the Delhi NCR region, late and unseasonal rains in the South, availability issues of sand mining in the East and Uttar Pradesh and labour unavailability. Major slump was witnessed in the Eastern and Southern regions. Later, the demand picked up during December 2021 and has been firming up further during January 2022. Demand rebound in Q4 should bolster cost pass-through for the industry. This, coupled with the fact that the key cost-side elements (coal/pet coke/diesel) have softened from the higher levels have alleviated concerns of a further increase in the operating costs for the industry. 

Though higher input costs will continue to impact the players in Q4FY22 due to the build-up of high-cost inventories, this should, thereafter, subside more in Q1FY23 assuming current trends in input costs. Therefore, margins of cement players are expected to bottom out in Q3FY22 and improve thereafter at the back of potential price hikes and waning cost pressures. Further to the earlier report dated October 28, 2021 (Cement Sector: Battling the cost wave), CareEdge reiterates that the macros of the cement industry continue to remain positive and the industry is expected to witness a robust mid-teen growth in overall cement demand in FY22 and thereafter 6%-7% Yo-Y in FY23. The demand is mainly driven by recovery of activity in the urban housing sectors, upcoming general elections in 2024, infrastructure projects as well as rural demand and renewed real estate demand. However, any potential halt on the construction activities amidst upsurge of infections pertaining to the third wave of Covid-19 shall remain a key monitorable for the growth in the coming months.

Demand momentum continues 

The cement industry is expected to be benefitted by high volume growth, majorly driven by revival in demand from the urban housing sectors, upcoming infrastructure projects such as construction of roads, railways, highways as well as generous rural demand. The long-term drivers of demand such as National Infrastructure Protection Plan, Bharatmala projects, mission ‘Housing for All’, rapid urbanisation, rising rural incomes remain strong with increased government impetus on infrastructure projects amid the upcoming elections in 2024. While a decent demand and volume expansion was witnessed in the first seven months of FY22, the months of November and December saw muted growth mainly due to factors, including construction ban in the NCR, heavy rainfall in the South and few Northern states and issues related to availability of sand in the Eastern region and UP. 

Production of cement fell by 3.3% in November 2021 year-on-year; however, the cumulative cement production index increased by around 29% during April to November 2021 over the corresponding period of the previous year. Nevertheless, some recovery has thereafter taken place in the second half of December month,which is a significant month for the sector, as it marks the onset of peak construction period. Furthermore, historically, cement demand in January has been 4% higher than December. 

With the strong demand momentum to sustain, the credit outlook for the cement sector is expected to remain positive. However, any potential halt on the construction activities amidst upsurge of infections pertaining to the third wave of Covid-19 shall remain a key monitorable for the growth in the coming months. With healthy growth in volumes coupled with stronger balance sheets, many cement players have planned capacity additions to maintain their market shares. CareEdge expects capacity additions of about 100-110 MT between FY22 and FY25. The third wave of Covid-19 may put some temporary breaks on the expansion plans of players. Nevertheless, the pace of expansion and demand matching up with the same shall be a key monitorable for the sector. 

Input Costs

The average fuel cost for the industry has increased by Rs 250-300 per tonne in H2FY22. There has been a decline in imported coal, pet coke and diesel prices in the last two months from their earlier peak levels, alleviating concerns of any further steep increase in the operating costs for the players. Although the fuel cost for the industry is believed to have peaked in Q3FY22, it would remain at slightly elevated levels for the players due to high-cost inventories in Q4FY22. Full benefits of fall in fuel prices are expected to start accruing from Q1FY23. 

• Australian coal prices have fallen to USD 162-169 per tonne as in January 2022 from its peak of USD 224 per tonne in October 2021. 

• Pet coke prices which move in tandem with crude oil prices fell to USD 150 per tonne in January 2022 from its peak of USD 200-220 per tonne in November 2021. The prices of domestic pet coke have increased from Rs 9,135/MT in December 2020 to Rs 20,781/MT in November 2021, and they declined in December 2021 with average price of Rs15,680/MT which is still 72% higher Y-o-Y. 

Realisations: Expected to stay strong 

The previous attempt by the cement players to hike the prices in October 2021 could not last long and these hikes were rolled back due to lack of demand in November 2021. With expected volume growth going forward, the industry is again poised to take price hikes. The price hikes are required to pass on the increased cost pressures as imported coal/pet coke and diesel prices, though lowered from previous high, remain elevated. 

The month of October 2021 saw Rs 20-30/bag price hikes across regions, but these were partially rolled back in November-December 2021. Pan India prices seem up around 1% in Q3FY22 Q-o-Q led primarily by price rise in Northern, Central and Western regions but partially offset by Q-o-Q fall in prices in the Eastern and Southern regions. In FY22 on a Y-o-Y basis, pan India prices are likely to remain up around 4%-5%. With pickup in demand, companies are expected to announce price hikes in the range of Rs.10-25 per bag across regions for the month of January 2022.

Demand momentum should keep pace for the price hikes to sustain, and any potential halt on the construction activities amidst upsurge of infections pertaining to a possible third wave of Covid-19 affecting cement demand shall be key. 

Due to the cost upsurge until November 2021 coupled with the roll back of the price hikes (earlier announced in October 2021) in the cement prices in Q3FY22, the EBITDA margins for the quarter ending December 2021 is likely to bottom out, though margins are expected to recover partially in Q4FY22 with the likely price hikes to be taken by players. 

In the present circumstances where the sector is grappling with the higher input cost, a sustained increase of prices along with demand stand critical for the operational performance of the players in the near term. Going forward, CareEdge expects cement prices to trend higher in Q4FY22 due to a pickup in the overall construction activities, leading to a higher cement demand.

Concrete

India Sets Up First Carbon Capture Testbeds for Cement Industry

Five CCU testbeds launched to decarbonise cement production

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The Department of Science and Technology (DST) recently unveiled a pioneering national initiative: five Carbon Capture and Utilisation (CCU) testbeds in the cement sector, forming a first-of-its-kind research and innovation cluster to combat industrial carbon emissions.
This is a significant step towards India’s Climate Action for fostering National Determined Contributions (NDCs) targets and to achieve net zero decarbonisation pathways for Industry Transition., towards the Government’s goal to achieve a carbon-neutral economy by 2070.
Carbon Capture Utilisation (CCU) holds significant importance in hard-to-abate sectors like Cement, Steel, Power, Oil &Natural Gas, Chemicals & Fertilizers in reducing emissions by capturing carbon dioxide from industrial processes and converting it to value add products such as synthetic fuels, Urea, Soda, Ash, chemicals, food grade CO2 or concrete aggregates. CCU provides a feasible pathway for these tough to decarbonise industries to lower their carbon footprint and move towards achieving Net Zero Goals while continuing their operations efficiently. DST has taken major strides in fostering R&D in the CCUS domain.
Concrete is vital for India’s economy and the Cement industry being one of the main hard-to-abate sectors, is committed to align with the national decarbonisation commitments. New technologies to decarbonise emission intensity of the cement sector would play a key role in achieving of national net zero targets.
Recognizing the critical need for decarbonising the Cement sector, the Energy and Sustainable Technology (CEST) Division of Department launched a unique call for mobilising Academia-Industry Consortia proposals for deployment of Carbon Capture Utilisation (CCU) in Cement Sector. This Special call envisaged to develop and deploy innovative CCU Test bed in Cement Sector with thrust on Developing CO2 capture + CO2 Utilisation integrated unit in an Industrial set up through an innovative Public Private Partnership (PPP) funding model.
As a unique initiative and one of its first kind in India, DST has approved setting up of five CCU testbeds for translational R&D, to be set up in Academia-Industry collaboration under this significant initiative of DST in PPP mode, engaging with premier research laboratories as knowledge partners and top Cement companies as the industry partner.
On the occasion of National Technology Day celebrations, on May 11, 2025 the 5 CCU Cement Test beds were announced and grants had been handed over to the Test bed teams by the Chief Guest, Union Minister of State (Independent Charge) for Science and Technology; Earth Sciences and Minister of State for PMO, Department of Atomic Energy, Department of Space, Personnel, Public Grievances and Pensions, Dr Jitendra Singh in the presence of Secretary DST Prof. Abhay Karandikar.
The five testbeds are not just academic experiments — they are collaborative industrial pilot projects bringing together India’s top research institutions and leading cement manufacturers under a unique Public-Private Partnership (PPP) model. Each testbed addresses a different facet of CCU, from cutting-edge catalysis to vacuum-based gas separation.
The outcomes of this innovative initiative will not only showcase the pathways of decarbonisation towards Net zero goals through CCU route in cement sector, but should also be a critical confidence building measure for potential stakeholders to uptake the deployed CCU technology for further scale up and commercialisation.
It is envisioned that through continuous research and innovation under these test beds in developing innovative catalysts, materials, electrolyser technology, reactors, and electronics, the cost of Green Cement via the deployed CCU technology in Cement Sector may considerably be made more sustainable.
Secretary DBT Dr Rajesh Gokhale, Dr Ajai Choudhary, Co-Founder HCL, Dr. Rajesh Pathak, Secretary, TDB, Dr Anita Gupta Head CEST, DST and Dr Neelima Alam, Associate Head, DST were also present at the programme organized at Dr Ambedkar International Centre, New Delhi.

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Concrete

JK Lakshmi Adopts EVs to Cut Emissions in Logistics

Electric vehicles deployed between JK Puram and Kalol units

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JK Lakshmi Cement, a key player in the Indian cement industry, has announced the deployment of electric vehicles (EVs) in its logistics operations. This move, made in partnership with SwitchLabs Automobiles, will see EVs transporting goods between the JK Puram Plant in Sirohi, Rajasthan, and the Kalol Grinding Unit in Gujarat.
The announcement follows a successful pilot project that showcased measurable reductions in carbon emissions while maintaining efficiency. Building on this, the company is scaling up EV integration to enhance sustainability across its supply chain.
“Sustainability is integral to our vision at JK Lakshmi Cement. Our collaboration with SwitchLabs Automobiles reflects our continued focus on driving innovation in our logistics operations while taking responsibility for our environmental footprint. This initiative positions us as a leader in transforming the cement sector’s logistics landscape,” said Arun Shukla, President & Director, JK Lakshmi Cement.
This deployment marks a significant step in aligning with India’s push for greener transport infrastructure. By embracing clean mobility, JK Lakshmi Cement is setting an example for the industry, demonstrating that environmental responsibility can go hand in hand with operational efficiency.
The company continues to embed sustainability into its operations as part of a broader goal to reduce its carbon footprint. This initiative adds to its vision of building a more sustainable and eco-friendly future.
JK Lakshmi Cement, part of the 135-year-old JK Organisation, began operations in 1982 and has grown to become a recognised name in Indian cement. With a presence across Northern, Western, and Eastern India, the company has a cement capacity of 16.5 MTPA, with a target to reach 30 MT by 2030. Its product range includes ready-mix concrete, gypsum plaster, wall putty, and autoclaved aerated fly ash blocks.

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Holcim UK drives sustainable construction

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Holcim UK has released a report titled ‘Making Sustainable Construction a Reality,’ outlining its five-fold commitment to a greener future. The company aims to focus on decarbonisation, circular economy principles, smarter building methods, community engagement, and integrating nature. Based on a survey of 2,000 people, only 41 per cent felt urban spaces in the UK are sustainably built. A significant majority (82 per cent) advocated for more green spaces, 69 per cent called for government leadership in sustainability, and 54 per cent saw businesses as key players. Additionally, 80 per cent of respondents stressed the need for greater transparency from companies regarding their environmental practices.

Image source:holcim

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