Higher fuel cost and low-demand headwinds seen for cement companies

Planned supply-additions likely to coincide with post-election weakness in demand. Weak monsoons, rise in fuel cost to add further woes

Even as cement companies continue to announce ambitious expansion plans, analysts turn cautious over the sector as incremental supply is expected to coincide with a weak demand growth period, and other headwinds of higher fuel costs, weak monsoons and general elections.

In August, JSW Cement said it will take its current 19 million tonnes (MT) capacity to 60 MT in the next five years. The country’s top producers have massive expansion plans underway – UltraTech Cement targeting 200 MT, Adani Cement aiming for 140 MT and Dalmia Cement planning for 110-130 MT.

Ravleen Sethi - Associate Director - CARE Ratings estimates an