Coal news and updates

India’s Oct cement production up after 4 months

India Coal Market Watch

December 21: After touching a high of over 24 million tons (mt) in May 2015, India’s cement production started witnessing a decline for four consecutive months but rose 5.92% to 22.73 mt in October, compared to 21.46 mt produced in September 2015, largely on hike in demand.

There is another brighter side as well. India’s cement production touched 160.05 mt in the first seven months (April-October) of the current financial year of 2015-16, up 2.62% compared to 155.96 mt produced in the same period of 2014-15.  

According to data available with ICMW, production in October 2015 was up 11.64% as compared to 20.36 mt produced in October 2014.

According to industry insiders, many southern India-based cement plants have been running at 50% utilisation levels owing to sluggish demand. Overall, Rs 90,000 crore worth of production capacity has been lying unutilised. However, owing to the recent rise in demand, there was a northward demand trend in the month of October 2015.

India’s installed capacity is around 386 mt and capacity addition is expected to dip in the coming year. In the next three years, ie, 2015-16 to 2017-18, 40 mt is expected to be added to capacity. During this period, incremental demand could be 60 mt.

As per statistics, the Indian cement industry is riddled with over-supply. Cement volume growth has been weak in the past 3-4 years, led by a slowdown in infrastructure, commercial investment and the housing sector.

In financial year 2013-14, while production was at 364 mt, demand was 247 mt, resulting in a gap of 117 mt of oversupply. In the year 2014-15, the gap was wider at 130 mt. Surplus capacity is estimated to be reduced to around 100 mt by 2017-18.

But the industry is pinning its hope on the forthcoming boom in housing, rapid increase in commercial, industrial and infrastructure investments which could bring a sea change to the rather dismal picture at present.

The cement sector is actually looking at the Modi government’s initiative of 2022 which aims at, among other things, 60 million houses, 1 lakh km new roads, $13 billion worth western and eastern freight corridors, $1.1 billion worth of 100 smart cities, $32 billion worth of Swatch Bharat Mission, $17 billion worth of metro projects in 10 tier 2 cities, 5 new mega power projects worth $16 billion as well as $48 billion added investments in infrastructure.

Keeping this scenario in mind, the cement sector is slated to add 40 mt added capacity in the next 3 years.

The following table shows India’s month-wise cement production in 2014-15 and 2015-16: