BackSector Update: Cement
Sector Update: Cement
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In February’09, all-India cement production and dispatch rose 8.6% and 8.7% y-o-y, respectively. Strong volumes in the North and East were pulled down by a slump in the Central and West.
Due to upcoming elections, infrastructure-led Government spending propped up demand in February ’09.
All-India capacity utilization was 92% (95% a year earlier and 93% in the previous month). At 88%, the South recorded the lowest utilization rate; at 97%, the Central region the highest. Capacity during the month increased by 0.55m tonnes (in the western region) to 207.8m tonnes.
Combined volumes of the top five companies for February ’09 rose 6.7% y-o-y. ACC’s volume growth was bleak (3.6% y-o-y) and India Cements’ plunged (-7.8% y-o-y).
Aggregate YTD dispatch growth of the top five has been just 4.1% y-o-y. Of the outperformers in y-o-y volume growth, were the North-based Shree and JK Cements; others were OCL, Orient and Kesoram.
Prices have increased by Rs3-7 a bag across India except in some parts of the South. Demand in Feb-Mar has picked up, mainly in government projects.
Dealers attribute this to a smart rise in government spending due to the impending elections, fiscal year end and peak period of construction.
They expect demand to decelerate after March ’09. Nevertheless, the real estate sector continues its poor performance.
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