Cement Industry In India And Cement Prices
The Indian cement industry is unique in that it is dominated by a few companies.
The top 20 cement companies account for almost 70 % of the total cement production of the country. A total of 210 large cement plants account for a cumulative installed capacity of over 350 million tonnes, with 365 smaller cement plants accounting for the balance capacity. Of these 210 large cement plants, the lion's share 77 are located in the states of Andhra Pradesh, Rajasthan and Tamil Nadu.
Approximately 67 % of the cement consumption can be attributed to the housing sector in India, 13 % to the infrastructure sector, 11 % to the commercial construction sector and the rest to the industrial construction sector.
Currently the Indian cement industry has surplus capacity and this situation is only going to become worse given the expansion plans of cement majors. Currently supply far outstrips demand and this can only put pressure on cement prices.
Only <70% of the total installed capacity is being currently utilized. The balance 30% installed capacity is lying idle.
In the year 2018 alone rising value of the dollar has put cost pressure on cement companies as a major raw material pet coke is being currently imported. The rising price of crude has also put cost pressure on cement companies because of its impact on fuel and logistics costs, for both raw material movement and finished product movement. According to Indian cement industry insiders, at the end of 2018-beginning of 2019, we can expect an impact of Rs.25-30 per bag of cement. This is to cover the enhanced cost of pet coke, fuel costs and logistics costs.
Another noteworthy point is that current cement prices are at the 2011-2012 levels.