<article><p class="lead">Indian cement firms have added about 7mn t/yr of manufacturing capacity during the past month as part of their broader expansion plans. </p><p>Higher cement output typically raises demand for petroleum coke and thermal coal, the two key fuels for cement makers.</p><p>India's largest cement maker private-sector Ultratech recently commissioned an additional cement grinding capacity of 2.2mn t/yr at its unit in the eastern province of Bihar, taking its total domestic cement making capacity to 129.15mn t/yr. This additional capacity will help the company to service the fast-growing cement demand in the eastern region, Ultratech said on 19 April. </p><p>Ultratech aims to <a href="https://direct.argusmedia.com/newsandanalysis/article/2354543">raise its cement capacity to 200mn t/yr by 2030</a> through organic and inorganic expansions. It has ongoing expansion projects to add capacities of 39mn t/yr by 2025. </p><p>Private-sector cement maker Dalmia Bharat added capacity of 2.5mn t/yr at its unit in the eastern province of Jharkhand, the company said on 22 April, adding that its total capacity has increased to 41.1mn t/yr. Dalmia Bharat is executing plans to add 12mn t/yr to its capacity by early 2024 as a part of broader plans to reach 110mn-130mn t/yr by 2031.</p><p>Fellow private-sector producer JK Cement raised its capacity by 2mn t/yr to 20.67mn t/yr in late March. It had announced plans to expand capacity by 5.5mn t/yr in November 2022 over two years through brownfield and greenfield projects. Shree Cement, another major player, has upgraded its unit in eastern province of Jharkhand to add 500,000 t/yr of cement capacity to reach a total of 46.9mn t/yr, it said on 22 April.</p><p>India is the world's second largest cement producer after China, but has a low per-capita consumption of 240-250 kg/yr, compared with a global average of 500-550 kg/yr. Most cement makers are investing in expansion projects to address growing demand.</p><p>The cement sector continues to witness a spate of capital expenditure announcements in anticipation of medium-term demand growth and market share gains, according to India Ratings and Research, a subsidiary of global ratings agency Fitch. India Ratings expects a large chunk of the industry's announced capacity addition of 150mn t/yr to become operational by March 2025, it said on 17 April.</p><p>The cement sector is likely to witness increased consolidation in the near-to-medium term, given the widening gap between larger and smaller players given a tough environment, India Ratings added. The aggressive medium-term capacity targets of large players are unlikely to be achieved organically. </p><h3>Softening fuel to lift margins</h3><p class="lead">Softening fuel and power costs will help raise the cement industry's earnings before interest, taxes, depreciation and amortisation (ebidta) to 950-1,000 rupees/t ($11.60-$12.20/t) during the April 2023-March 2024 fiscal year, India Ratings said, adding that downside risks could arise from a rebound in coal and coke prices. </p><p>Ebidta of cement makers is likely to have slipped to Rs750-Rs800/t in 2022-23 from over Rs1,000/t during 2021-22 as input costs soared and muted cement demand limited the industry's ability to sustain cement price hikes, it added. <i>Argus</i> assessed the cfr India 6.5pc sulphur coke price at $138/t on 19 April, down sharply from the February average of $177.50/t. Coke prices have corrected owing to lower fob rates, increased availability and subdued demand in key markets like China. </p><p class="bylines">By Ajay Modi</p></article>
