Home > Cement > Cement despatches in June: Unimpressive

Cement despatches in June: Unimpressive

The cement despatch numbers declared by companies reflected unimpressive performance for June 2010. This was on account of poor demand from the infrastructure segment, as big projects are nearing completion. Besides, there is a lull in other construction activities due to the arrival of monsoon. Further, despatch growth suffered due to a high base effect as a delayed monsoon had ensured robust figures for June 2009.

Despatches of Ambuja Cement increased by 6.3% on a YoY basis during June 2010 to 1.7 million tonnes. This growth was aided by its presence in the northern region, which enjoyed relatively good demand, and the recent capacity additions made by the company.

The southern region is facing a slowdown in demand, which resulted in a decline in ACC’s despatches. JP Associates’ cement shipments rose 65% YoY to 1.33 million tonnes in June 2010, primarily because of the massive capacity addition carried out by the company over the past few months.

Cement prices are lower than both the month-ago as well as the year-ago levels in June 2010. The decline in prices was on account of a surge in capacity added during the last year as well as a slowdown in demand due to monsoon — the latter being a regular feature.

While cement prices are on a decline, shortage of railway wagons has crippled supply. The recent increase in diesel and petrol prices is expected to dent profitability of cement manufacturers since they are not in a position to raise prices, given the weakening demand.

The main areas of concern are rising cost of energy and transportation.

Categories: Cement
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