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MOSL: CEMENT-Constant capacity addition to keep cement utilization under check

CEMENT: Constant capacity addition to keep cement utilization under check; however, clinker utilization to improve substantially

 

Cement utilization to reach 70%, while clinker utilization to improve to 80% by FY21

• The Indian cement industry should witness a capacity addition of ~77mt over FY19-21E— translating to a capacity addition of ~26mt each year and registering a 6% CAGR over FY19-21E. But, total clinker addition during the same period is pegged at just 34mt. As a result, cement utilization is expected to increase 5.5pp to 70%, while clinker utilization should increase 9.4pp to 80% over FY18-21E.
• In the recent limestone bids, ~2,330mt of limestone reserves were auctioned since 2016; of this, 34% reserves are in the western region. The northern and the eastern regions each comprised 28-29% of the reserves auctioned.
• Apart from the 77mt of additional capacities, dormant plants like Kalyanpur and Murli should also come on stream over FY19-21. The recent ramp-up of Binani’s assets and its brownfield capacity augmentation will also be a key monitorable. 

Northern region to witness maximum utilization improvement

• The eastern region should witness maximum amount of capacity addition, to the extent of 26mt over FY18-21, followed by the southern region witnessing an addition of 20mt. The northern region seems to be better placed and should witness capacity addition of only 6mt over the period as a result of which cement utilization should improve 14pp to 84%.
• ~34mt of clinker capacity is expected to get added over FY19-21. The western region is expected to witness the least clinker addition, followed by the eastern region. Highest amount of clinker addition is expected in South India.