Cement dispatch figures for May 2009 have grown to 16.5 million metric tonne (MMT),

North continues to shine

• Cement dispatch figures for May 2009 have grown to 16.5 million metric tonne (MMT), an increase of 10.8% year on year (yoy). The rise in dispatch reading for the month was mainly on the back of higher government spending on infrastructure projects and personal housing construction in rural and semi-urban areas. 

• The utilisation ratio for the month on a year-on-year basis improved marginally to 90.4% as against 89.1% a year ago mainly on the back of rise in demand. However, the same declined on a month?on-month (m-o-m) basis from 92.3% in April 2009 to 90.4% in May 2009 mainly because of a higher production base (of April 2009) and capacity increment (to the tune of 2.4MMT primarily in southern and eastern regions). 

• Bar southern region, all other regions posted impressive volume growth for the month. Northern India continued with its leading position posting a whopping 26.3% year-on-year volume growth. Central and western regions also registered impressive volume growth of 11% and 8.3% respectively. The eastern region, which witnessed the highest price hike (in January-April 2009), posted a 7.2% volume growth, the same being below industry average. The southern region posted a disappointing performance with the volumes growing by just 4.1% for the month. 

• Among the cement companies under our coverage, Shree Cement continued to lead the clutch with the volumes growing by 32.2% yoy to 0.7MMT for May 2009. Grasim Industries and Ultratech Cement also registered impressive volume growth of 21.8% yoy and 24.7% yoy respectively. Barring ACC, other top cement makers saw a healthy volume growth for the month. ACC and Ambuja Cements posted volume growth of 1.1% and 8.2% yoy respectively.

• In May, cement prices remained stable across the country on a month-on-month basis (except in Kolkata, where prices increased by Rs5-7 per bag of 50 kg from May 01, 2009). On all-India basis, cement prices have risen by Rs15-20 per bag in the last four months (January-April 2009) but remained stable in May 2009. According to dealers, cement prices are likely to remain at current levels till the mid of July and may come down by Rs5-10 per bag by the end of July with the arrival of monsoon.

• Imports from Pakistan increased by 32.6% on a m-o-m basis to 81,909 tonne in May 2009 vis-a-vis 61,790 tonne in April 2009. The rise in import was due to increasing price differential between domestic and imported cement. Going forward, cement import is expected to rise further due to increasing cost of domestic cement and demand by Indian builders to abolish the countervailing duty on imported cement.