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September 01, 2018

Sector Report: Cement

This report is available to users in India for ₹40,000 + applicable taxes


Table of Contents


  • Summary
  • Segment-Wise Demand
  • Region-Wise Demand
  • Capacity Additions
  • Blending
  • Operating Rates
  • Long Term Outlook
  • Costs & profitability




Robust demand growth in FY18 on a weak FY17; growth momentum to continue hereon


Continuing on the momentum gained in previous year, cement demand rose at 8-9% in FY18, fastest in more than 8 years.Significant pick-up in affordable housing and infrastructure activity on a very low base of FY17 propelled the demand growth.


In FY19, cement demand is expected to remain healthy and grow by 7-8%, led by affordable housing, rural IHB (indirectlysupported by govt. rural initiatives) and infrastructure led activities especially in a pre-election year. Cement demand isexpected to be driven by Eastern, Central and Northern region. Further elections in Rajasthan and Madhya Pradesh stategovernment over next year shall also augur well for the demand growth.


Over a five-year period, cement demand is projected to increase at 6-6.5% CAGR, led by pick up in affordable housing, rise ingovernment spending on infrastructure activities, and healthy rural housing demand. At regional level eastern states followedby central and north regions would see healthier growth with continued state governments focus on development.


Operating rates improved marginally in FY18; to be under pressure in near term.


Aided by robust growth, operating rates increased to ~65% in FY18. However, in FY19 too, operating rates are expected toremain rangebound, despite healthy demand growth on account of number of capacity additions lined up (30-32 MT to beadded in FY19 and FY20 each). However, upcoming supply addition is expected to prevent any further rise.


Over the long-term, CRISIL Research projects the industry's capacity utilization to hover at 68% during the next 5 years.


At a regional level, South will continue to have the lowest utilization rates at ~50-55% and continue therby to be a drag on pan-India utilization rates. With ~18 mtpa capacity additions in southern region in the next 2 years, the region's operating rate,which is hovering around 55%, is expected to remain under pressure.