Cement industry growth may slip below 8% in June

Demand slowdown from key cement consuming sectors is likely to push the industry’s growth graph below eight per cent in June. Though the industry statistics will be released next week, the initial numbers from cement majors signal a remarkable decline in demand.

According to analysts, demand slowdown from infrastructure and real estate segments, coupled with decline in demand in the North due to the Commonwealth Games in New Delhi, will make it tough for the industry to maintain a growth rate of above eight per cent in June.

For instance, Ambuja Cements, part of Swiss major Holcim, had only a 6.2 per cent rise in sales during the month. ACC, the sister concern, continued its dull performance with sales of 1.78 million tonnes, down 1.7 per cent year-on-year.

Shree Cement, a northern major, surprised analysts with a flat rise of 1.4 per cent in sales, at 0.79 mt against 0.77 mt in the corresponding month last year.

However, Jaiprakash Associates continued its robust growth in June on the back of newer capacities. Sales were 65 per cent higher at 1.32 mt, against 0.8 mt last year in the same month.

Experts said ACC’s continuous dull sales numbers were surprising, as the company had increased its capacities. “Despite adding newer capacities, ACC’s sales are below than last year’s,” said an analyst with a domestic brokerage firm.

The Aditya Birla Group has yet to state its June sales. The group controls around 50 mt of capacity under its two cement companies, UltraTech and Samruddhi. The month under review, saw further decline in prices across the country. “Whatever gains in cement prices were seen between November last year and this April seem to have been washed away. The current national average price of cement is in the range of Rs 220-230 for a 50-kg bag,” he added.

A few pockets in the North and states in the northeast region, plus Bihar and Jharkhand, managed to continue with high prices. As the monsoon spreads, demand from the construction sector is likely to dampen, resulting in more price corrections.