May 2012 dispatches up ~14% YoY…
Cement majors have reported their dispatches for May 2012. Aggregate
dispatches of the nine companies taken into account have increased by
~14% YoY and ~6% MoM. This was supported by a pick-up in
construction activities during the month after lifting of the ban on sand
mining in the northern region, which impacted the April dispatches.
Ambuja and UltraTech dispatches grew ~10% YoY while ACC dispatches
grew ~3% YoY. Jaypee and Shree Cement continued their
outperformance with ~30-33% YoY growth. JK Cement, JK Lakshmi and
Mangalam Cement also reported high growth of ~18%, 16% and ~58%,
respectively.
In April 2012, dispatches grew ~7% YoY. However they declined ~14%
MoM due to the sand mining ban by the high court in northern
(particularly in Rajasthan), southern and western regions during the month
coupled with shortage of labour (due to starting of the harvest season)
and inventory build-up in March.
Cement Sector Update - June 2012
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Cement Sector Update - June 2012
Cement price weakens by ~| 5-15/bag MoM in May 2012
All-India average cement prices witnessed a decline of ~| 10/bag in May
2012 and stood at ~| 290/bag. The decline was led by price corrections in
the northern and central regions, which witnessed weakening of | 10-
15/bag on an MoM basis. In the southern region, prices declined mainly in
Andhra Pradesh by | 15/bag on account of low demand owing to the sand
mining ban. The eastern region witnessed mixed trends as prices
remained stable in some parts during May 2012. According to dealers,
cement prices are expected to see some corrections due to the upcoming
monsoon season and subdued construction activity.
Industry outlook
All-India cement consumption grew 7.5% in FY12 vs. 4.4% in FY11,
mainly backed by 12.5% growth during November 2011-March 2012 as
against 3.5% during April 2011-October 2011. Demand picked up during
the period on account of a low base & increase in offtake from
construction activities post monsoon. However, the utilisation rate stood
at 77% in FY12 as the incremental capacity addition negated the impact of
incremental demand during the period. In FY13E, though we expect
demand growth of ~10% YoY, the utilisation rate is expected to remain at
~77% as the incremental capacity of ~26 MT would likely negate the
impact of incremental demand of ~19 MT. However, it is expected to
improve to ~80% in FY14E as incremental demand addition (~25 MT) is
likely to surpass the addition in effective capacities addition of ~21 MT.
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