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Prices fall, outlook not too optimistic

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The steep demand growth in the first half FY19 has increased optimism in the industry earlier, which seems to be tapering after the latest round of fall in prices.

Cement prices, which rose by about 6 per cent over September and October 2018, have seen a downward trend again in December, close on the heels of remaining neutral in November 2018. After remaining neutral at 2054.7 pints in November at the lifetime peak, ET Cement Index that tracks cement price movements in different regions, has witnessed a fall of 2.61 per cent to 2001.05 in December 2018. The industry veterans exuded hope in November that the high growth trend witnessed in cement demand in the first half of FY19 would continue in the second half, imparting the much needed pricing power to the industry. But somehow that is not to be. In the first half of FY 2019, the demand growth was at around 13 per cent, unheard of since 2010.

The cement industry, which remained subdued for four years, picked up pace in the third quarter of FY19, driven largely by government initiatives such as Bharatmala, Housing for All, Swacch Bharat Abhiyaan, Sagarmala and metro construction, according to Cement Manufacturers Association (CMA). The focus on infrastructure has pushed up volume growth of the cement sector from 4 per cent to 12 per cent between September 2017 and September 2018.

Though some cement majors with pan-India presence are said to be pushing volumes to meet year-end targets, rising cost of inputs have continued to put pressure on the industry bottom lines, leading to certain stock market players downgrading the cement sector.

In a recent report, leading brokerage Morgan Stanley has downgraded the sector, stating that upside for cement prices is capped in the second half of FY19 (2018-19) mainly due to demand risk in the real estate segment because of potential funding challenges.

While raising the sectors FY19 demand growth estimate to 9 per cent from 7.5 per cent earlier, Morgan Stanley hints at a downside risk in the urban/semi-urban real estate segment, but felt that the infrastructure-led demand should be sustained. It also sees a potential demand moderation in second half of FY 2019. It expects the industrys capacity utilisation to rise a modest 1 per cent YoY in FY20 to 79 per cent (for the companies it covered).

Mahendra Singhi, president of the CMA, exuded hope that the cement demand will grow about 8 per cent in FY19 and that he was positive on the long term (five-year) outlook for growth of the industry.

Taking cue from the general optimistic trend in demand growth in the first half of FY19, many cement manufacturers have announced expansion plans in the last two months. Singhi expects that around 20-25 million tonnes (MT) of fresh capacity to be added in FY19 and FY20 each.

With the average capacity utilisation of the industry still low at 70 per cent, expansion of capacities without commensurate growth in demand could impact the pricing power of the industry in the medium term.

Prices fell for the fifth month in a row in the south. On an average, cement prices declined by Rs 5 per bag this month in the region, continuing the decline that started in August, a dealer said. Demand remained lukewarm in northern, central and western India regions too with producers from south pushing their products to other regions.

In the northern region, there is another reason for slowdown – most of the construction workers move back to their villages in December for harvesting seasonal crops. However, there is an expectation that the cement prices will inch up in the region from January 2019, when the construction workers return and activity resumes.

The only event that could change the trend towards positive for the industry is reduction of Goods and Services Tax (GST) from 28 per cent to 18 per cent, which the industry has been demanding for quite sometime.

However, the demand did not materialise in GST rate reductions on several goods announced in December 2018, that have come into effect from January 1, 2019. Cement being one of the top tax grosser for the government, including the state governments, they are said to be against the move.

Analysing the impact of reduction in GST on cement as expected by the industry, Vaibhav Agarwal of PhilipCapital said that it will be a overall positive for the industrys growth and pricing power. Cost of construction will come down resulting in more affordable real estate prices, leading to improved demand for real estate and housing?segment, albeit in the long term.

It will also provide some breather to the industry by increasing their pricing power, so that they can cover the rising logistics and input costs, in the medium term. And even it may improve transparency in the distribution channels, imparting some stability to prices, Agrawal feels.

But by when the reduction in GST for cement will happen, still remains a million dollar question

– B.S. SRINIVASALU REDDY

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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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Concrete

Shree Cement reports 2025 financial year results

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Shree Cement posted revenue of US$2.38 billion for FY2025, marking a 5.5 per cent decline year-on-year. Operating costs rose 2.9 per cent to US$2.17 billion, resulting in an EBITDA of US$528 million—down 12 per cent from the previous year. Net profit fell 50 per cent to US$141 million. The company reported cement sales of 9.84Mt in Q4 FY2025, a 3.3 per cent increase from 9.53Mt in Q4 FY2024, with premium products making up 16 per cent of total sales.

Image source:https://newsmantra.in/

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Concrete

Rekha Onteddu to become director at Sagar Cements

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Sagar Cements has announced the appointment of Rekha Onteddu as a non-executive independent director, effective 30 June 2025. According to People in Business News, Rekha Onteddu is currently serving in a similar capacity at Andhra Cements, the parent company of Sagar Cements.

Image source:https://sagarcements.in/

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