Pace of expansion may decline in cement sector

Care Research expects cement companies to slowdown the pace of capacity expansion on the back of surplus capacity prevailing in the industry. A report released by the firm shows capacity of the sector rose from 219 mn t in 2008-09 to 325 mn t tonne in 2012-13, registering a CAGR of 10.4 percent. The report expects cement firms to add capacity of about 66 mn t during the period of 2014-2016. Utilisation rate of the sector declined from the peak of 93 percent in 2006-07 to 73 percent in 2012-13 on account of huge capacity addition, the report shows. Given the slowdown in pace of capacity addition and gradual recovery in cement demand, utilisation rate may improve gradually, the firm said in the report. The overall operating rate of the industry may increase to 76 percent in 2015-16, it said. The demand would improve on government's increased focus on strengthening infrastructure, the promotion of affordable housing, lowering trend of interest rates and expected revival in the overall economic growth, it said.