Indian cement major ACC has said cement demand may grow at a healthy rate of 10 per cent in 2012 but subdued capacity utilisation and higher raw material costs will keep prices under pressure.
"The demand for cement is expected to grow at 10 per cent over 2011. A lower utilisation rate coupled with increase in cost of raw materials and increasing logistics costs are likely to keep overall prices under pressure in all regions," it said in its annual report.
"Pressure on costs will continue to mount mainly due to increases in the cost of domestic coal and owing to volatility in costs of imported coal," ACC said, adding that availability of fuel at reasonable rates was one of the main concerns of the company as it uses large quantities of coal annually to meet its kiln and captive power generation requirements.
"During the current year, coal prices are expected to further rise sharply. This, coupled with limited production of fuel in the country, is expected to result in higher input costs for a fuel intensive industry like cement," ACC said.
The cement major said as the availability of linkage coal is gradually dwindling, it is trying to mitigate its fuel risk by increased usage of alternative fuels and optimisation of coal mix.
"We have initiated steps and is in the process of developing own coal blocks which would partly go to meet its coal requirements," it added. (Source: Press Trust of India)