1. Cement Monthly | 17th Apr’12
Monthly cement dispatches- March’ 2012 Sector Update
Stock Performance Cement giants ACC, Ambuja and UltraTech together, reported
6.6% YoY increase in their dispatches for the month of Mar-
Scripts Y-o-Y M-o-M Mar-12 Mar-11 Feb-12 2012 to 8.53 mn tonnes. Cited increase in construction works
UltraTech 32.9 7.3 1506.9 1133.8 1404.1
across Eastern & Northern India & marginal uptick in
ACC 26.1 3.9 1356.3 1075.2 1304.9
Ambuja 16.5 6.9 171.2 147.0 160.1 consumption across the Western & Central India as key
Jaypee -11.7 16.4 81.6 92.5 70.1 reasons for such higher dispatches.
Shree 53.9 14.5 3196.5 2076.5 2791.3
JK Lakshmi 27.7 8.6 65.2 51.0 60.0
Demand impact:
Cement dispatches continued to grow in double digit for the
All India demand/supply scenario fourth consecutive month on account of increase in off take from
Million tonnes FY’09 FY’10 FY’11 FY’12
construction activities post monsoon. Demand is improving in
Effective capacity 203.7 228.1 272 290.3 rural housing, semi-urban housing and infrastructure segments
Production 181.4 199.3 208.3 216.8 in the western, northern and most importantly southern regions.
Capacity Utilization (%) 89.1 87.4 76.6 74.7
After a sharp increase in cement prices is witnessed during last
Consumption 181.4 199.3 208.3 216.8
Consumption (%) 8.4 9.9 4.5 4.1 month, it is expected that demand to remain upbeat as the
Surplus/Deficit 22.3 28.8 63.7 73.5 industry is heading towards the pre-monsoon period, which is
traditionally a period of increased demand. Moreover the Union
All- India Average cement price
Budget's focus on developing infrastructure and on affordable
All India average cement price per 50 kg per bag
310
and rural housing should provide a boost to cement demand over
All India Cement Price stood at `300. Bihar the next few quarters. We expect demand to grow at 8% in FY13.
300 reported a sharp rise, cement price stood at
`425 per 50 kg bag
290 Price Scenario:
All India cement prices have increased by `10-30 per bag in the
280 last month and are currently hovering in the range of `300-310
per bag. This increase was mainly done to pass on increased cost
270
` per bag
owing to hike in rail freight and excise. Prices in the northern
260 region improved by `15 to stood at `280 per bag. Cement prices
in Eastern region rose by `10 with prices hovering near its peak
250 levels of `310 per bag. Central region too witnessed an increase
of `20 on account of the 20% freight hike recently announced by
240
the Indian Railways. Prices in UP witnessed an uptick of `25 per
230
bag and with elections coming to an end; we expect a pick-up in
construction activity in the region. Western region once again
220 witnessed maximum price increase of `25 per bag driven by
Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 better demand in Gujarat due to mass housing schemes in light of
state elections in 2012. Currently cement prices are hovering in
Source: Dealers, RK Global Research
the range of `265-280 per bag. We expect the demand
Research Analyst: momentum to continue on the back of government-led projects
Aditya Vikram Jha
aditya.jha@rkglobal.in
and housing demand growth.
Industry outlook
After increasing charge in Q3FY12 from 7% to 10% and the development surcharge from 2% to 5%, the railways
have again gone for another round of freight rate increase by 19-33%, with effect from March 6. This has resulted
in weighted rail freight increase of 20%. As the industry transports 45% of its total production through railways,
the freight cost for the industry is expected to increase by 10%. Also the industry sources 55% of its coal
requirement from domestic linkage coal for which preferred mode of transportation is railways, thereby resulting
in further increase of 2-3% in power & fuel cost. Cement manufacturers have already hiked prices by at least `10
per bag to offset the cost increase. We expect cement demand to remain upbeat as the industry is heading
towards the pre-monsoon, which is traditionally a period of increased demand. Moreover the Union Budget's
focus on developing infrastructure and on affordable and rural housing should provide a boost to cement demand
over the next few quarters. We maintain our demand growth estimate of 8% in FY13.
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2. Cement Monthly
In Million tones Mar-12 Mar-11 Y-o-Y % Feb-12 M-o-M % FY'12 FY'11 Y-o-Y %
Dispatches
UltraTech 4.0 3.8 6.2% 3.5 15.8% 39.7 38.5 3.2%
ACC 2.3 2.2 7.3% 2.2 8.8% 21.8 22.0 -0.9%
Ambuja 2.2 2.1 6.2% 2.0 8.9% 21.7 20.3 6.9%
JP Associates 2.0 1.6 28.7% 1.9 4.0% 18.9 15.8 19.5%
Top 4 Players 10.5 9.6 10.1% 9.5 10.4% 102.1 96.6 5.7%
Production
UltraTech 3.9 3.8 4.4% 3.5 11.5% 39.9 38.5 3.5%
ACC 2.0 2.2 -8.7% 2.1 -6.5% 23.8 21.9 8.6%
Ambuja 2.2 2.0 12.3% 2.0 10.1% 21.5 20.4 5.3%
UltraTech Cement
UltraTech Cement
Dispatches Production Dispatches growth UltraTech, which derives 25% of its volumes from southern
4.5 region, continued to witness a higher growth in its sales
22
4.0
volumes for the fourth consecutive month. This coupled
17
12
with 7.3% YoY growth in industry-wide dispatches in Feb
3.5
7 12, indicates that situation is improving in the southern
3.0 region.
In MT
2
2.5 -3 Production grew by 4.6% and dispatches growing by 6.2%
2.0 -8 on a YoY basis to 4.02mt in March 12. Sequentially, it
-13
1.5 recorded a decline of 14.2% in dispatches.
-18
Capacity utilization too improved by 315 bps YoY to 85.3%
1.0 -23
in Feb 12. Cumulatively it improved by 246 bps to 87.8%.
%
Mar-11 Jun-11 Sep-11 Dec-11 Mar-12
ACC Cement
ACC Cement
Dispatches Production Dispatches growth
ACC's cement production and dispatches during the month
2.5 20 of March 12 increased 5.0% YoY and 7.3% YoY to 2.30mt &
15 2.34mt respectively. Sequentially dispatches witnessed a
2.0
10 growth of 8.8%.
1.5 5
ACC has recorded superlative growth in dispatches in FY12
In MT
on the back of increased capacity. On a cumulative basis the
1.0 0
company registered a volume growth of 10.7% on YoY
-5
basis.
0.5
-10 Capacity utilization improved by 433 bps YoY to 90.5% in
0.0 -15 March 12. Cumulatively it improved by 794 bps to 86.3%.
Mar-11 Jun-11 Sep-11 Dec-11 Mar-12
%
Ambuja Cement Ambuja Cement
Ambuja Cement reported a better than expected
Dispatches Production Dispatches growth
2.5 performance in last month as its dispatches grew by 12.4%
22 YoY to 2.18mt as against 1.94mt in the corresponding
2.0 17 month previous year. On month on month basis, it reported
12 highest volume growth of 8.9% among the top 4 players.
1.5
This superlative performance is mainly due to its dominant
In MT
7
1.0 2 position in fast growing western region, where it sells
-3
~40% of its total output.
0.5 On a cumulative basis (FY’12), the company registered
-8
volume growth of 6.0% to 21.72mt. Capacity utilization
0.0 -13
improved by 1071 bps YoY & 897 bps MoM to 97.9% in Feb
%
Mar-11 Jun-11 Sep-11 Dec-11 Mar-12
12. On a cumulative basis it improved by 442 bps to 87.0%.
Source: Company, RK Global Research
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3. Cement Monthly
Region- wise cement price movement Western Region
Cement price in Mumbai Cement price in western region witnessed upward pricing trend
340 in the range at `300 per bag, post excise duty hikes announced in
320
the budget session. After witnessing seasonally good demand in
300
February, consumption levels marginally dropped in the month
280
of March. With new regimes taking charge in the recently
260
concluded civic body elections in Maharashtra, execution of the
240
pending projects has taken back seat. Despite ongoing poor
220
demand scenario, we expect prices to remain firm in the near
term.
200
Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12
Eastern Region
Cement price in Kolkata
405 All-India average cement price picks up by | 10/bag MoM in October witnessed sharp price
Cement prices across Eastern region
increases of `40 per bag in March. This price hike has been on the
385 All-India average cement prices have increased by ~| 5-15/bag in October
365
back of (a) good demand scenario and supply bottlenecks and (b)
2011 across all regions and stoodrecently announced hike in excise duty rates. Of the 4 cities
at ~| 248/bag. This major hike was
345
325 seen in the eastern region where prices increased Raipur all In the
surveyed, except by ~| 15/bag.other cities reported supply
305 north and central region, prices have increased by ~| 10/bag MoM whileacross all cities (except
bottleneck related issues. Also, dealers
285 Raipur) have expressed increase in the consumption levels. We
265
prices have increased by ~5/bag inexpect supply related issues will persist in April, too. Accordingly,
the southern and western regions. We
245 expect cement prices to recover further in October 2011 on account of to surge by `15 per bag.
cement price in the region are expected a
225 pick-up in dispatches.
Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12
Southern Region
Cement price in Chennai Average cement prices in Chennai and Hyderabad stood to `330
300
and `310 per bag, respectively, Cement price in Chennai and Goa,
295 owing to continued increase in demand, witnessed price hike of
`20-30 per bag post-budget announcements. Interestingly,
290
despite continued poor demand trends, cement prices increased
285
by `10-15 per bag in Hyderabad and Bangalore. We expect
another round of price hikes of `10-15 per bag can be seen in
280 Chennai. On the other hand, Hyderabad and Bangalore expect
prices to remain stable during April.
275
Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12
Cement price in Lucknow Central Region
270
Cement prices in central India indicates a mixed set of demand
260 trends (poor demand in Bhopal and Lucknow vs. strong demand
seen across Kanpur and Allahabad After excise duty hike
250
announcements, prices have increased by `10-15 per bag in
240 regions with poor demand and by `25-40 per bag in regions
230
witnessing strong consumption. Good demand scenario coupled
with supply related bottlenecks led Kanpur to witness highest
220 price hike of `40 per bag. We expect cement prices to remain
210 stable in near-term, at current levels of `275-300 per bag.
Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12
Cement price in Delhi Northern Region
310
300
Cement price in the region witnessed a sharp surge of `40 per
290 bag. Such increase in prices is on the back of (a) improving
280 consumption patterns and (b) recent announcement of excise
270 duty hike on cement. Except in Delhi NCR region, dealers from
260
other places in Northern region (Punjab and Haryana) cited
250
240
continued increase in the consumption. Demand in Delhi is
230 expected to pick-up, which is generally seen every year during
220 the months of April & May. We expect cement price in Northern
210 region to increase by `15-20 per bag backing incremental
Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 consumption in rural and semi urban areas.
Source: Dealers, RK Global Research
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4. Cement Monthly
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