Cement dispatches for June 2009 grew by 12.9% year-on-year (y-o-y) to 16.7 million metric tonne (MMT).
The rise was principally on the back of strong demand in rural and semi-urban areas and higher governmental spending on infrastructure projects.
The utilisation ratio for the month on a year-on-year (y-o-y) basis improved marginally to 87.8% as against 86.5% a year ago, primarily on rise in demand.
However, the same declined on a month–on-month (m-o-m) basis mainly because of a higher production base (of May 2009) and capacity increment (to the tune of 5.3MMT primarily in southern and eastern regions).
Except southern region, all other regions posted impressive volume growth for the month. Among the regions eastern region witnessed the highest volume growth of 21.2%. Northern and central region also posted robust growth of 20.3% and 16.2% respectively.
However, the southern region registered a poor volume growth of 5.3%, which is below the industry average. The utilisation ratio of the southern region for the month under review is also the lowest at 78.5%.
Among the cement companies under our coverage, Shree Cement continued to lead the clutch with the volumes growing by 27.9% y-o-y to 0.8MMT for June 2009.
Grasim Industries and Madras Cement also registered impressive volume growth of 27% yoy and 20.2% yoy respectively. Except ACC, other top cement makers saw a healthy volume growth for the month.
On the other hand Orient Paper and Industries Ltd (Orient Paper) and India Cements saw 15.2% and 0.5% decline in volumes respectively.
For the month cement prices remained stable in Mumbai, Delhi and Kolkata. However prices fell by Rs4-5 in Chennai and Hyderabad on m-o-m basis.
As per a recent update, few small cement players have reduced cement prices in Mumbai by Rs3-4 per bag from July 01, 2009. However in Kolkata cement makers have increased prices by Rs7-8 per bag effective July 01, 2009.
On an all-India basis, cement prices have risen by Rs15-20 in the last four months (January-May 2009) but remained stable in June 2009.
According to dealers, cement prices are likely to remain at current levels till the end of July, and may come down by Rs5-10 per bag in the beginning of August.