Cement Update Oct ’10 dispatches soar 18.5%, YTD growth inches up to 7%: Anand Rathi

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Cement Update
Oct ’10 dispatches soar 18.5%, YTD growth inches up to 7%
 Oct ’10 volumes soar 18.5%. Production rose 19% at all-India level
and 18.5% for dispatches yoy in Oct ’10. The strong demand got a
boost from inventory build-up with dealers due to advance
announcements of prices hikes. We expect lower yoy dispatches
growth for Nov ’10. Dispatches in the North, West and Central zones
rose 29%, 24% and 22% yoy respectively, while those in the
East/South grew 14%/7% yoy.


 Utilization levels rise. All-India capacity utilization for Oct ’10 was
83% (80% yoy, 72% mom). At 67%, the South recorded the lowest
and at 111%, the Central the highest utilization. Capacity additions in
the month were 3.8m tons, increasing installed capacity to 267m tons.
 Top-four post strong volume growth. Combined volumes of the
top-four cement companies for Oct ’10 rose 25.7% yoy, mainly
boosted by JPA’s strong 70% yoy growth. Outperformers in volume
growth were JPA, JK Cement, Dalmia, Orient Paper and Shree
Cements.
 Price performance mixed. Prices in Nov ’10 declined `5-10/bag in
the North, East and some parts of the South, while remaining stable
in other regions. In the North, the announced price-hike did not go
through as demand paled. Demand growth during November was
slow, largely due to shrinking demand from government and real
estate projects as well as owing to labour shortage. Dealers expect
demand to pick up in December.