Cement production to increase by 12 per cent in FY2022
Cement

Cement production to increase by 12 per cent in FY2022

In the past five months, Indian cement production has increased by 44 per cent on a YoY basis, and 2 per cent compared to the pre-pandemic year in April-September 2019 to 142 million tonne (mt). According to a report by the Investment Information and Credit Rating Agency (ICRA), Indian cement p...

In the past five months, Indian cement production has increased by 44 per cent on a YoY basis, and 2 per cent compared to the pre-pandemic year in April-September 2019 to 142 million tonne (mt). According to a report by the Investment Information and Credit Rating Agency (ICRA), Indian cement production is likely to increase by 12 per cent to 332 mt in FY22 and 8 per cent to 358 mt in 2022-23. Demand will further increase from rural housing and the pickup in infrastructure activity.The utilisation levels of the cement industry are expected to maintain moderate levels of 62-64 per cent in 2021-22 and 2022-23 owing to capacity additions. During the first half (1H) of 2021-22, cement prices were higher by 4 per cent YoY. Prices have increased because of increased input costs of power, fuel and freight in the past few months. The ICRA report says coal prices were higher by 103 per cent, pet coke by 87 per cent and diesel by 20 per cent YoY in 1H FY22. Total revenue, from 12 cement companies, is expected to grow by 13 per cent in FY22. It added that this would be supported by volumetric growth and increased input costs may put pressure on operating margins, resulting in main contraction by about 200-230 basis points.According to Anupama Reddy, Assistant Vice President and Sector Head, ICRA, capacity additions might increase to about 18-20 mt per annum (mtpa) in FY22 and about 27-30 mtpa in FY23 from 15 mtpa in FY21. Eastern India may be the leading zone of capacity expansion and is likely to add around 17 mtpa, followed by the Central Region at around 13 mtpa, in 2022-23. She added that with the expected increase in cement demand in FY22 and FY23, utilisation might improve by 62-64 per cent from 57 per cent in FY21.

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