India: cement volume growth

Volume growth in the Indian cement market increased by 12-18 per cent in the quarter ending March 2016 compared to the 4.7 per cent drop seen in the corresponding quarter last year. This level of growth is the largest seen in the last six quarters, and the only growth to reach double digits, as reported by The Economic Times, India.

Due to lower petcoke and coal prices the cost of producing 1t of cement fell by 8.6 per cent to INR3517 (US$52.70) YoY.

Medium and small companies in the country reported an average volume growth of 18 per cent in the March quarter, while large firms reported a 16 per cent growth. Most mid-sized companies, such as Orient Cement and Dalmia Bharat, earned high volume growth due to capacity expansion. For example, Orient Cement’s capacity grew by 3Mta, reaching 8Mta this past year. Dalmia Bharat reported the highest volume growth at close to 25 per cent, partly due to increasing its stake in OCL India BSE by 2.31 per cent through its subsidiary Dalmia Cement.

Larger companies such as Shree Cement and UltraTech Cement, which hold 25 per cent of the country’s total capacity, will benefit from the reviving demand given their wider geographical presence and ability to dictate prices.