Cement Industry Updates

Capex Updates

The already struggling Indian cement industry has been hit hard by the coronavirus crisis. Management statements on demand revival haven’t been very encouraging. So, many cement manufacturers have delayed their capital expenditure (capex) plans.

Ultratech Cements Ltd has projected a capex of ₹10 billion for fiscal year 2021 (FY21). This is lower than the ₹16 billion incurred in fiscal year 2020.

Shree Cements Ltd will decide on its large capex plan of doubling capacities in six years, only after demand conditions improve.

ACC Ltd is expanding its capacity by 18%, the management expects commissioning by 2022 only, a likely delay of 6-12 months due to Covid-19.

India Cements Ltd, JK Cements Ltd and Orient Cements Ltd, have also postponed their capex plans.

Indian Cement industry Price Updates

Cement Price Updates

Cement Prices

The cement industry is seeing some demand recovery now that lockdown is being lifted in many states.

According to  a Kotak Institutional Equities (KIE) Ltd report released recently, 

“Rural and pent-up demand has led to higher-than-expected volumes in May-June 2020 and the industry could just suffer nearly 40% year-on-year decline in 1QFY21E volumes, better than earlier expectations,".

Against this background, cement prices, however, have seen moderation. The Kotak Institutional Equities (KIE) Ltd report stated "Our dealer checks suggest all-India cement prices have declined by 3% to ₹369/bag in June 2020 with easing supply-side constraints after a sharp 10% month-on-month increase in May 2020".

However  Indian Cement Industry insiders have across the board stated that Cement prices are likely to be on the higher side for Cement companies to break even given the current economic situation.