15 November 2018

Table of Contents for Industry Focus- Cement & Cement Equipment





Industry Focus- Cement & Cement Equipment

Cementing India: A tale of significant growth

 

A cyclical industry with regional demand dynamics, India’s cement industry needs to enhance its capacity utilization, for which regional consolidation is necessary. Behind all that thriving infrastructural buzz, cement production in India is on an upsurge and its positive ripples reverberate over subsets like cement equipment and construction equipment industry on the whole, reports Rohan Ambike.

 

India is the second largest producer of cement in the world. The Indian cement industry is dominated by a few companies. Domestic cement production during April-December 2017-18 stood at 216.5 million tonnes (MT), higher by 2.7 per cent compared to 210.8 MT during the same period of the previous financial year. The growth of cement industry is expected to be 6-7 per cent in 2018 because of the government’s focus on infrastructural development. The industry is currently producing 280 MT for meetings its domestic demand and 5 MT for exports requirement. The country’s per capita consumption stands at around 225 kg.

 

Cement companies have already expanded their capacities in anticipation of demand from the housing and infrastructure sectors. However, since the demand has not materialised, there is excess capacity in the cement industry. Once this happens, the cement manufacturers are expected to once again go into expansion mode and this is where the machinery manufacturers can play a vital role by catering to the need latest for the technology machines, equipments and products for cement manufacturers.

 

 

 

Global Cement Market 2017-2021

 

According to Technavio’s analyst, the global cement market is anticipated to grow at a steady rate and will post a CAGR of more than 9 per cent during the forecast period. The increasing use of energy efficient technologies will drive the growth prospects for the global cement market until the end of 2021. According to the global cement industry overview, the manufacturing process of cement requires a lot of energy. Also, this process involves the emission of carbon dioxide in high volumes, which can be conserved and used in different aspects. As a result, cement manufacturing units or cement plants are using new technological innovations that are designed with efficient working capabilities to conserve energy efficiently. A total of 188 large cement plants together account for 97 per cent of the total installed capacity in the country, with 365 small plants account for the rest. Of these large cement plants, 77 are located in the states of Andhra Pradesh, Rajasthan and Tamil Nadu. EPC projects and real estate will drive demand for cement majorly.

 

India Ratings and Research (Ind-Ra) has maintained a Stable Outlook on Indian cement manufacturers for FY18. Ind-Ra expects the operating profitability of cement manufacturers in FY18 to be around the FY16 and estimated FY17 levels, due to stable demand growth, despite an increase in input cost. Demand will be backed by an increase in government expenditure. Ind-Ra also expects the credit profile of cement manufacturers to remain stable on stable operating profitability and in the absence of debt-led capex.

 

Ind-Ra has revised down its FY17 growth estimates to 3 per cent-3.5 per cent from 4 per cent-6 per cent earlier. This revision is largely attributed to a blip in demand due to demonetization. Ind-Ra however expects the cement industry to grow 4 per cent-5 per cent y-o-y in FY18, driven largely by the demand stemming from infrastructure activities and a revival in housing demand in rural areas, both led by government spending. Ind-Ra expects stable cement demand to enable cement manufacturers to pass on increases in cost during FY18. Ind-Ra expects cement producers to add additional 50 mtpa capacity over FY16-FY18 at a CAGR of 6 per cent compared to the CAGR of 4.9 per cent during FY13-FY16 (additional 40mtpa). The country’s eastern region will continue to lead supply growth and is likely to add 17mtpa through FY16-FY18, followed by north (14mtpa). The CAGR capacity additions in the eastern (10 per cent) and northern regions (7 per cent) may outpace cement demand in these regions.

 

 

 

Global Prospects

 

The eastern states of India are likely to be the newer and virgin markets for cement companies and could contribute to their bottom line in future. In the next 10 years, India could become the main exporter of clinker and gray cement to the Middle East, Africa, and other developing nations of the world. Cement plants near the ports, for instance the plants in Gujarat and Visakhapatnam, will have an added advantage for exports and will logistically be well armed to face stiff competition from cement plants in the interior of the country. A large number of foreign players are also expected to enter the cement sector, owing to the profit margins and steady demand.

 

In future, domestic cement companies could go for global listings either through the FCCB route or the GDR route. With help from the government in terms of friendlier laws, lower taxation and increased infrastructure spending, this sector will grow and take India’s economy forward along with it.

 

 

 

Size of Market

 

Cement industry is largely driven by the housing and real estate sector. It is estimated that around 65 per cent of the total cement consumption is done by the housing and real estate sector. The rest 15 per cent is through industrial development and public infrastructure makes up the remaining 20 per cent. The total cement produced in India amounts to around 455 million tonnes in the year 2017-18. Experts have predicted that the cement consumption will grow by 4.5 per cent in FY 19 as a result of the growth in the spending of the housing segment and higher infrastructure spending. The industry is currently producing 280 MT for meetings its domestic demand and 5 MT for exports requirement.

 

 

 

 

Trends

 

Use of alternative fuels

 

Cement industry makes use of approx 65 per cent of the coal produced globally is used by the power industry. However, alternate fuels such as waste oil, solvents, non-recyclable plastics, pre-treated industrial and municipal wastes, textiles, and paper residues; biomass such as animal meal, wood chips, waste wood, rice husk, sawdust, and sewage sludge; and unrecyclable tires from abandoned dumps have also been used successfully in many jurisdictions.

 

 

Innovative progression

 

Creative progress has brought improvements in production volumes of the cement manufacturers. However, higher production volumes have also resulted in an increase in the primary source of air pollution across the globe. The primary reason for air pollution in the cement business includes excavation activities, conveyer belts, crushing mills, and kiln emissions.

 

 

 

Rising demand for green cement

 

The rise in construction and building activities is the primary growth initiator for the global green cement market. The demand for green cement is accelerating the growth of alternative fuels that are derived from waste materials such as, solid recovered fuels, foundry sand, used oils, sewage sludge, animal meals, filter cakes, and fly ashes.

 

The resistance offered by green cement to several construction projects for less alkali compound in comparison to OPC is expected to play an important role in the market’s development. The upcoming projects such as nuclear power plants, the construction of bridges and pavements, and other infrastructural developments are expected to present a high demand for lucrative opportunities to the overall market.

 

 

 

Opportunities for Cement Industries in India

 

Initiatives by the Government

 

The new schemes launched by the goverment such as Atal Mission for Rejuvenation & Urban Transformation (AMRUT), Bharatmala and Sagarmala for roads and port connectivity, toilet building under the ‘Swachh Bharat Mission' and housing for all have had a good impact on the cement industry since the last couple of years. Events such as the construction of 1.09 crore bathrooms within the past 12 months has been a positive direction for cement.

 

 

 

Growing real estate market

 

The speedy rise in the real estate sector in India has boosted the demand for cement. As a result of the growing population and the rise in urbanisation, we have seen a surge in the mass usage of cement. Additionally, hiking income levels are striking to better demand for luxurious initiatives. This has been another reason for the growth of the real estate market.

 

 

Funding in infrastructure:

 

India’s investment in infrastructure is envisioned to double approximately USD1 trillion which is approximately 9 percent of GDP, throughout the twelfth Five Year Plan compared to the previous plan. Infrastructure is the fundamental physical structure of buildings, roads, and investment in infrastructure is the primary growth driver.

 

 

 

Challenges for Cement Industries

 

Extreme competition

 

Today, the entire cement industry has become tremendously competitive in nature. This is as a result of the role played by the larger players in the market. The prices per bag of cement have been restored and this has made the other players to decline prices via greater productivity, a decline in power cost and logistics expenses. Due to this, the profit margins of SMEs are coming down than the larger organisations.

 

 

 

Lack of coal

 

Coal is the most crucial raw material for the cement industry. However in the recent years, the delivery of coal has dropped drastically from 70 per cent to 39 per cent as a result of the diversion of coal to the power region. This situation had put a pressure on the cement agencies to open market buy or imported coal which works out to almost 2 to 3 per cent times better than the home prices. With the increasing cost of coal and different input material together with diesel, and many others, the production value of cement has gone up considerably which is not permissible for the SME’s to grab a top place in cement industries.

 

 

 

Drop in cement exports

 

With the high incidence of authorities levees, infrastructure constraints at ports and the regulation of the authorities supplying encouragement for import of cement with zero custom duties, the export of cement and clinker from India has been steadily and constantly declining from approximately 9 million tons to 3.5 million tons, notwithstanding the reality that Indian cement enterprise is presently having the substantial extra potential of cement and clinker.

 

 

 

Comeback of state-run cement manufacturing unit

 

The Government of India is making plans to revive the state-run cement factories throughout India, for you to provide a boost to street and reality tasks by means of bringing down their construction expenses. These country run factories ensure cement at a backed rate and for that reason create massive opposition for the SMEs.

 

 

Key Players

 

AMCL Machinery Ltd

 

AMCL Machinery Limited, is a complete solution provider in the field of cement and raw material grinding. AMCL has been actively involved in the business of design, manufacturing, supply and installation of vertical roller pre-grinding mills (VRPM), Classifiers, coal conveying system and Tri-lobe blowers. In addition, the company also manufactures complete range of rubber and tyre machineries like Banbury Mixers, Mixing Mills, Tyre Building Machines, Tyre Curing press, Calenders, Extruders, Tube Splicers etc.

 

 

 

Nord Drivesystems

 

Cement based materials are essential for sustainable building. However, cement manufacture is a sophisticated process whose individual stages require a great deal of energy. This makes energy costs one of the largest cost factors for the industry. Because of this, cement production requires drive units which can stand up to harsh conditions and are also especially energy-efficient.

 

For more than 45 years, NORD DRIVESYSTEMS has been at home in almost every branch of industry where conveying solutions are used. Our drive components and systems are essential wherever things need to be moved, because all movement needs drive - as efficiently and safely as possible. Because of this, we provide an entire spectrum of mechanical, electrical and electronic drive technology from a single source - from energy-efficient motors and low-loss gear units to centralised and decentralised control technology.

 

 

 

Supertech International

 

Located in (Meerut India), Supertech International are the reliable Service Provider & manufacturer engaged in providing Cement plant, Cement plant machinery and equipments, cement crusher, material handling equipments etc all over India. The company provides a wide array of designing services in a budget-friendly manner to cater to diverse industries. India has a lot of potential for development in the infrastructure and construction sector and the cement sector is expected to largely benefit from it. Some of the recent major initiatives are expected to provide a major boost to the sector.

 

 

 

 

 

Future path

 

With the growing infrastructure expenditure and increasing industrial base, India is set to witness significant growth in its GDP resulting in favorable outcome for cement industry in the coming years, as per the research carried out by Research and Markets. Being a pivotal in the economic growth of the country, cement is an essential item for the construction sector and for all infrastructural projects. Owing to increased thrust from the government, the cement sector is expected to witness positive growth in the coming years, with consumption set to increase at a CAGR of around 9 per cent during FY 2017-FY 2020.

 

Domestic cement production during April-December 2017-18 stood at 216.5 million tonnes (mt), higher by 2.7 per cent compared to 210.8 mt during the same period of the previous financial year.

 

 

 

FAST FACTS

 

  • Domestic cement production during April-December 2017-18 stood at 216.5 million tonnes (mt), higher by 2.7 per cent compared to 210.8 mt during the same  period of the previous financial year.

 

  • The industry is currently producing 280 MT for meetings its domestic demand and 5 MT for exports requirement.

 

  • In the next 10 years, India could become the main exporter of clinker and gray cement to the Middle East, Africa, and other developing nations of the world.

 

  • A total of 210 large cement plants account for a cumulative installed capacity of over 350 million tonnes, with 350 small plants accounting for the rest. Of these 210 large cement plants, 77 are located in the states of Andhra Pradesh, Rajasthan and Tamil Nadu.

 

  • Being a pivotal in the economic growth of the country, cement is an essential item for the construction sector and for all infrastructural projects.

 




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