Cement volumes growth points to demand revival

June 9, 2016

According to analyst estimates volume growth in cement increased by 12-18 per cent in the March 2016 quarter compared with a drop of 4.7 per cent in the corresponding quarter of the previous fiscal. This is the first double digit growth in six quarters reflecting a pickup in construction activity apart from benefits of lower input costs. The cost required to produce per tonne of cement fell by 8.6 per cent to Rs. 3,517 year due to lower prices of pet coke and coal, which are major raw materials needed to manufacture cement.

Medium and small companies reported average volume growth of 18 per cent in the quarter ending in March while large companies showed 16 per cent growth. Most midsized Cement companies such as Orient Cement, JK Lakshmi Cement, and Dalmia Bharat earned high volume growth on the strength of capacity expansion. For instance, in the past one year, Orient Cement's capacity improved to 8 million tonnes (MT) from 5 MT. This improved the prospects for a better volume growth for the midsized companies in the industry.